Week9.Lecture.Chapter17

Week9.Lecture.Chapter17 - Chapter 17...

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Chapter 17 Property Transactions:  § 1231 and  Recapture Provisions
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C17 - C17 - 2 §1231 Assets (slide 1 of 3) §1231 assets defined Depreciable and real property used in a business or for production of income and held greater than 1 year Includes timber, coal, iron, livestock, unharvested crops Certain purchased intangibles (patents and goodwill which are eligible for amortization)
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C17 - C17 - 3 §1231 Assets (slide 2 of 3) § 1231 property does not include the following: Property not held for the long-term holding period Nonpersonal use property where casualty losses exceed casualty gains for the taxable year Inventory and accounts receivable Copyrights Accounts receivable and notes receivable arising in the ordinary course of a trade or business
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C17 - C17 - 4 §1231 Assets (slide 3 of 3) If transactions involving §1231 assets result in: Net §1231 loss = ordinary loss Net §1231 gain = long-term capital gain Provides the best of potential results for the taxpayer Ordinary loss that is fully deductible FOR AGI Gains subject to the lower capital gains tax rates
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C17 - C17 - 5 Special Rules For Certain §1231 Assets Casualty gains and losses from §1231 assets and from long-term nonpersonal use capital assets are determined and netted together If a net loss, items are treated separately §1231 casualty gains and nonpersonal use capital asset casualty gains are treated as ordinary gains §1231 casualty losses are deductible FOR AGI Nonpersonal use capital asset casualty losses are deductible FROM AGI subject to the 2% of AGI limitation If a net gain, treat as §1231 gain
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C17 - C17 - 6 §1231 Netting Procedure (slide 1 of 2) §1231 asset and long-term nonpersonal use capital asset casualty gains minus §1231 asset and long-term nonpersonal use capital asset casualty losses Net Gain (add to §1231 gains) Items treated separately: Gains are ordinary income, §1231 asset losses are deductible for AGI, Other losses deductible from AGI §1231 gains minus §1231 losses Net Gain Net Gain Net Loss Net Loss Net Gain Net Gain N et Loss Loss
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C17 - C17 - 7 §1231 Netting Procedure (slide 2 of 2) Lookback Provision:
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This note was uploaded on 06/21/2010 for the course MANAGEMENT 127a taught by Professor Gadner during the Spring '08 term at UCLA.

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Week9.Lecture.Chapter17 - Chapter 17...

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