Unformatted text preview: CHAPTER 13 CHAPTER 13
Property Transactions Skip Pgs. 26 39 Realized Gain/Loss vs. Realized Gain/Loss vs. Recognized Gain/Loss Gain/Loss Formula Realized Gain/Loss = Sale Price – Adjusted Basis Recognized Gain/Loss Is the amount of Realized Gain/Loss that is recorded in tax return Adjusted Basis – May Change Over Time Increased by any improvements Decreased by depreciation Recovery of cost is nontaxable Recovery of Capital Doctrine Identification – ex. Employee stock purchase plan Allocation – ex. Asset purchase Goodwill – purchased vs. selfcreated Basis Computation Issues Basis Computation Issues Stock Dividends – original basis is spread over additional shares received (thereby reducing per share basis) Gifts – basis is affected by: Date of Gift; Basis of property to the Donor; Amount of gift tax paid by Donor; Fair Market Value on Date of Gift Inheritance – usually results in “steppedup” basis to beneficiaries Asset Sales Between Related Parties
members of same immediate family corporation and majority shareholder Disallowed Losses Disallowed Losses Wash Sales RePurchase of Same Security Within 30 Days of Sale Unless converted to business use; Then basis is determined as the lower of: Cost or FMV on date of conversion Personal Use Assets Sale of Personal Residence Sale of Personal Residence §121 provides for EXCLUSION of gain on sale of up to $250,000 (up to $500,000 if MFJ) Requirement: Must have been owned AND used as a personal residence for 2 of last 5 years Exceptions:
Change in place of employment Health (Disease; Injury; or Accident) Divorce; Death; Disaster ...
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- Spring '08
- 30 days, $500,000, $250,000, personal residence, Basis Computation Issues