AC 750 Chapters 10-22

AC 750 Chapters 10-22 - Chapters 10 & 11...

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Unformatted text preview: Chapters 10 & 11 Property Transactions AC 750 - Chapters 10 & 2 Property Transactions Realized Gain or Loss Amount Realized- Adjusted Basis Realized Gain or Loss Cash + FMV of Property + Liabilities Discharged- Selling Costs Amount Realized Cost or rules + capital improvements- depreciation Adjusted Basis What is "regonized"? AC 750 - Chapters 10 & 3 Character of Gain Ordinary or Capital? Capital assets are, generally, EVERYTHING EXCEPT : 1) Inventory 2) Depreciable property or land used in trade or business held for more than a year (1231) 3) Business assets held for less than 1 year 4) Trade accounts/notes receivable AC 750 - Chapters 10 & 4 Realized versus Recognized ordinary gains and losses : virtually all are recognized and net with other taxable income capital gains: virtually all are recognized Exceptions: (1) A portion of gain on sale of personal residence is excluded (MFJ - $500,000; other -$250,000) (2) 1202 stock capital losses: assets used for personal purposes are not re c o g nize d; m a y b e a n o ve ra ll lim ita tio n Any lo s s o n re la te d pa rty tra ns a c tio ns a re no t re c o g nize d Any lo s s o n wa s h s a le s a re no t a llo we d AC 750 - Chapters 10 & 5 Q ua lifie d S m a ll Bus ine s s S to c k 1202 Individual taxpayers are allowed to exclude 50%* of the gain on the sale or other disposition of qualified small business stock held for more than five years Maximum gain exclusion is the larger of $10 million minus gain previously excluded or 10 times the basis of all qualified stock of the corporation sold during the year Excluded gain is not used in net capital gain/loss calculation Included gain is taxed at 28% Gain may be deferred if the sales proceeds are reinvested in another QSB stock. *100% if acquired in 2011 AC 750 - Chapters 10 & 6 Computing Tax Liability on Capital Gains 1) Calculate recognized gain or loss on capital assets 2) Determine: Long-term à held over one year Short-term à held one year or less 3) Net Long Term gains and losses Net short term gains and losses 4) If LT Gains and ST Losses then net together If LT Loss and ST Gain then net together If LT and ST are both gains or both losses then keep separate 5) Calculate the tax the netting process AC 750 - Chapters 10 & 7 How Capital Gains are Taxed Short term gains are taxed as ordinary income Long term gains are taxed at 15% (0% for the lowest...
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AC 750 Chapters 10-22 - Chapters 10 & 11...

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