Chapter 14 - CHAPTER 14 CHAPTER 14 Capital Gains/Losses of...

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Unformatted text preview: CHAPTER 14 CHAPTER 14 Capital Gains/Losses of Property Taxations Skip Pgs. 11­20 & 31­55 Capital Asset Defined Capital Asset Defined Property Held Which Is Not: Inventory held for resale Accounts or Notes Receivable Depreciable Property or Real Estate Used In a Trade or Business Copyrights or written compositions Government Publications Supplies Used In Business Capital Gain or Loss Computation Capital Gain or Loss Computation Requires the Sale or Exchange of Property Review of Worthless Securities & §1244 Stock Recognized Gain or Loss = That amount of realized gain/loss that must be reported Holding Period: Determines Long term or Short term Special Tax Rates for Qualified Divided Income Must Follow Netting Rules for Capital Gains/Losses Individuals can: 1 year or less → Short Term Greater than 1 year → Long Term 1. offset capital gains against capital losses, then 2. claim up to $3,000 against ordinary income, then 3. carry unused capital losses forward indefinitely Capital Gains & Losses Capital Gains & Losses For Corporate Taxpayers Capital Losses Only Offset Capital Gains NO Deduction Against Ordinary Business Income NO Reduced Long­term Capital Gain Tax Rates for Corporations (i.e. LTCG taxed at ordinary rates) Capital Losses are granted a: Carryback of 3 Years & Carryforward of 5 Years ONLY (i.e. NO indefinite carryforward) Assets Used In Trade or Business Assets Used In Trade or Business Allows for Capital Gain Treatment and Ordinary Loss Treatment Must Meet Long Term Holding Requirement Includes Depreciable Real Property And Tangible Business Property (Buildings, Machinery, Equip, etc.) Does NOT Include Inventory, Accounts Receivable, Notes Receivable, or Copyrights (Section 1231 Assets) ...
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