5c - Gains & Losses Capital

5c - Gains & Losses Capital - Individual Income Tax...

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Unformatted text preview: Individual Income Tax Online Lecture Series Capital Gains and Losses Presented by Akore Berliner, CPA GAIN / LOSS FORMULA $ Amount Realized $ Less: Adjusted Basis = Gain or Loss WHAT IS A CAPITAL ASSET? CAPITAL ASSETS Generally: Assets held for investment (e.g., stocks, bonds, land) Personal use assets (e.g., residence, car) Miscellaneous assets selected by Congress CAPITAL ASSETS DEFINED Capital assets are defined as everything except : Inventory Notes and accounts receivables acquired from the sale of inventory or performance of services Realty and depreciable property used in a trade or business Certain copyrights; literary, musical, or artistic compositions; or letters, memoranda, or similar property when created by taxpayer (or for which taxpayer takes a carryover basis from the creator) CAPITAL ASSETS DEFINED - CONTINUED Capital assets are defined as everything except : Taxpayers may elect to treat a sale or exchange of musical compositions or copyrights in musical works as the disposition of a capital asset Certain publications of U.S. government Supplies of a type regularly used or consumed in the ordinary course of a business CAPITAL ASSETS - HOLDING PERIOD Holding Period = The time the asset is owed by the taxpayer Long-term assets are held for > 12 months Short-term assets are held for < 12 months TAX TREATMENT FOR NET SHORT-TERM CAPITAL GAINS Taxed as ordinary income TAX TREATMENT FOR NET LONG-TERM CAPITAL GAINS Taxed at Special Rates 0% for taxpayers in 10% or 15% brackets (until 2010) Taxed at 15% for taxpayers in all other brackets Collectibles held more than 12 months are taxed at a maximum rate of 28% NETTING GAINS: STEP 1...
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This note was uploaded on 02/01/2012 for the course ACC 2546 taught by Professor Dean during the Summer '10 term at San Diego State.

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5c - Gains &amp; Losses Capital - Individual Income Tax...

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