CHAPTER 8 Notes - CHAPTER 8 NOTES TAX 4001 2011/2012 Major...

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CHAPTER 8 NOTES TAX 4001 2011/2012
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Major Concepts Capital Asset Definition Capital Gains Netting Process Section 1231 Assets Defined Section 1231 Process Depreciation Recapture
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Capital Assets Defined Not the same description used for GAAP Tax Definition: Anything other than: Receivables Inventory Property Used in A Trade or Business (GAAP Capital Assets - Congress “fixes” this exclusion with Sec. 1231) Artistic Creations (prevents artists from converting ordinary income property into capital assets) Government Documents not acquired by purchase
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Capital Gains Netting Process - Individuals Separate Gains and Losses into Short Term and Long Term categories Long Term – held for more than 12 months (also, certain assets acquired in tax free exchanges) 3 Subcategories. Regular Capital Gains – 15% Unrecaptured Section 1250 Gain (real estate) – 25% Collectibles – 28% Short Term – held for less than 12 months – ordinary income rates
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CHAPTER 8 Notes - CHAPTER 8 NOTES TAX 4001 2011/2012 Major...

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