ch 12 powerpoint

ch 12 powerpoint - Chapter 12 Property Transactions...

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1 Chapter 12 Property Transactions: Treatment of Capital and Section 1231 Assets ©2011 CCH. Al Rights Reserved. 4025 W. Peterson Ave. Chicago, IL 60646-6085 1 800 248 3248 www.CCHGroup.com 1. Capital Assets—Defined 2. Determination of Capital Gains and Losses 3. Steps to Determine Taxable Income 4. Section 1231 Assets Chapter 12 Exhibits CCH Federal Taxation Comprehensive Topics 2 of 24 5. Determining Section 1231 Gains and Losses 6. Recap of the Rules 7. Recap of the Rules Applying the Loss Limitation 8. Computing Casualty and Theft Losses 9. Netting Personal-Use Casualty/Theft Gains/Losses Chapter 12, Exhibit Contents A 10. Personal Casualty and Theft Losses 11. Casualty and Theft Losses 12. Section 1245 Depreciation Recapture 13. Section 1250 Depreciation Recapture Chapter 12 Exhibits CCH Federal Taxation Comprehensive Topics 3 of 24 Chapter 12, Exhibit Contents B
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2 Capital Assets—Defined Code Sec. 1221 defines capital assets by stating what they are not. “Capital assets” generally refer to any property other than: 1. Ordinary income property (inventory, receivables, creative works created by the taxpayer) CCH Federal Taxation Comprehensive Topics 4 of 24 2. Depreciable business property (buildings and machinery) 3. Non-depreciable business property (land) Thus, capital assets would include investment property such as stocks and bonds, and personal use assets such as cars, principal residences, household furnishings and jewelry. (Note: Paintings, manuscripts, and other creative works are capital assets if created by someone other than the taxpayer). Chapter 12, Exhibit 1 Determination of Capital Gains and Losses Long-term capital gains are taxed up to 15% (0% for individuals in the 10% and 15% tax brackets), except for: Collectibles gains, which are taxed up to 28% CCH Federal Taxation Comprehensive Topics 5 of 24 Section 1202 gains, which are taxed up to 28% (sale of small business stock held more than 5 years). Un-recaptured Section 1250 gains, which are taxed up to 25%. Chapter 12, Exhibit 2a Step One Group gains or losses into 4 baskets and determine the net amount in each basket. 1) Short-term gains/losses. Determination of Capital Gains and Losses CCH Federal Taxation Comprehensive Topics 6 of 24 2) 28% long-term gains/losses. 3) 25% long-term gains (you will not have losses in this basket). 4) 15% long-term gains/losses (including 1231 LT capital gains) Chapter 12, Exhibit 2b
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3 Step Two Long-term net losses from the 28% basket are netted first against gains from the 25% basket and then against gains from the 15% basket. Long-term net losses from the 15% basket are netted Determination of Capital Gains and Losses CCH Federal Taxation Comprehensive Topics 7 of 24 first against gains from the 28% basket and then against gains from the 25% basket. Short-term net losses are also netted against long-term
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ch 12 powerpoint - Chapter 12 Property Transactions...

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