T11F-Chp-09-1-Acquisition-of-Property-2011-F

T11F-Chp-09-1-Acquisition-of-Property-2011-F - Chapter 9...

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Chapter 9 Property Acquisitions Howard Godfrey, Ph.D., CPA UNC Charlotte Copyright © 2010, Dr. Howard Godfrey Edited October 27, 2011.
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Preview of Coming Attractions Chapter 9 is the first of four chapters dealing with property Acquisition (Chapter 9) Depreciation (Chapter 10) Disposition (Chapter 11)
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Acquisitions of Property. Gift Property Introduction Gift Property Basis Classes of Property Split Basis-Loss Property Prop. Investment Cycle Holding Period Adjusted Basis Inherited Property Basis in Conduit Entities Primary Valuation Date Property Dispositions Alt. Valuation Date Initial Basis Distribution Date Purchase of Assets Other Considerations Amount Invested Prop. Converted to Business Bargain Purchase General Rule for Basis Basket Purchase Split Basis Rule Purchase of a Business Basis in Securities Constructed Assets Stock Dividends Special Acquisiton Wash Sale-Basis of Property. Summary 9. PROPERTY TRANSACTIONS
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Acquisitions of Property Classes of Property Property Investment Cycle Adjusted Basis Basis in Conduit Entities Property Dispositions
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Tax Definition of Property The term property refers to long- lived assets owned by a taxpayer. The amount invested in an asset is the property’s basis . Under the capital recovery concept , a property’s basis may be recovered before any taxable income is realized from disposal of
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Use of Property Property is classified by both its use and its type . Property is used for 1. Trade or business, 2. Production of income (investment), or 3. Personal purposes The same property may be used differently by different taxpayers
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Types of Property All property may be classified by type as either tangible or intangible Intangible property lacks physical substance and has only an economic existence Tangible property has physical substance Tangible real property (realty) consists of land and structures permanently attached to land
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Property Investment Cycle Property Acquisition Property Disposition Period of Use Initial Basis Adjusted Basis plus additional capital minus capital recoveries
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Basis of Property Basis is the taxpayer’s unrecovered investment in an asset that can be recovered without tax cost As the asset’s basis is recovered (through depreciation, depletion or amortization deductions),
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Acquisition in Taxable Exchange Basis of acquired asset equals the FMV of the property given up or FMV of the services performed Gain or loss is recognized as if cash had been
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Basis of Property The original basis of an asset includes Cash plus fair market value of property given up by the buyer Money borrowed and used to pay for the property Liabilities of the seller assumed by the buyer Expenses of the purchase such as
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Capital Expenditures The cost of a business asset with a useful life extending beyond the current year may be: Deducted currently Capitalized until disposal or Capitalized with the cost allocated to the years the asset’s use benefits (cost recovery period)
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This note was uploaded on 03/09/2012 for the course ACCT 4220 taught by Professor Burton during the Spring '08 term at UNC Charlotte.

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T11F-Chp-09-1-Acquisition-of-Property-2011-F - Chapter 9...

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