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CHAPTER 7 Notes - CHAPTER 7 NOTES TAX 4001 2011/2012 Major...

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CHAPTER 7 NOTES TAX 4001 2011/2012
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Major Concepts Realized Gain Basis Recognized Gain/Loss Holding Period Rules Like Kind Exchanges Involuntary Conversions
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Realized Gain Tax Consequences (Applicable to both buyer and seller) related to selling property: Amount Realized Less: (Adjusted Basis) = Gain or Loss Realized 1. Is the Gain or Loss Recognized ? 2. If so, what is its Character ? 3. What is the Basis of the New Property? 4. What is the Holding Period  of the New Property?
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Amount Realized FMV of Cash and Other Property Received Also includes Liabilities of the Seller that are assumed by the Buyer
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Adjusted Basis Generally, Cost Reduced by Depreciation Allowed or  Allowable Inherited Property – FMV at Decedent’s Date of Death (exception for Alt. Valuation Date) Property Acquired by Gift- Gain Basis – Donor’s Basis + Gift Tax Paid on Appreciation Loss Basis – Lesser of FMV or Donor’s Basis on Date of Gift Prevents deduction of nondeductible personal losses of donor
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