Class 3a Gains & Losses Overview

Class 3a Gains & Losses Overview - ENTITY...

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TAXATION OF THE BUSINESS  ENTITY ONLINE LECTURE SERIES Gains & Losses  An Overview Presented by Akore Berliner, CPA
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GAIN / LOSS FORMULA $ Amount Realized $ Less: Adjusted Basis = Gain or Loss Disposal of property results in Gain or Loss
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AMOUNT REALIZED = Gross Sales Price less Selling expenses    = Amount received by the seller from the buyer Cash  FMV of property received Liability assumed by or paid for by the buyer
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Original cost plus : Capital improvements* less : Accumulated depreciation = Adjusted basis * Items that significantly result in increase to property value or increase useful life Adjusted Basis
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CALCULATING GAIN/LOSS:  EXAMPLE   On 8/4/08, Dominic sold 326 shares of stock in Wind Farms Inc. that he had purchased 6/18/99. Cost basis = $10,000 Sales Proceeds = $19,000 Commission Fee = $1,300 Calculate amount realized and realized gain .
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SOLUTION Amount realized  = $19,000 Sales Process  – 1,300 Selling Expenses = $17,700      Realized gain  = $17,700 Amount Realized  – 10,000 Cost Basis  = $7,700 Gain
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