PROPERTY TRANSACTONS Mod 3-1

PROPERTY TRANSACTONS Mod 3-1 - MODULE NO 3-1 PROPERTY...

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MODULE NO. 3-1 PROPERTY TRANSACTONS: AMOUNT REALIZED & BASIS RULES (All References are to Paragraphs in Text) This is the first of three modules dealing with the transfer of property. The general formula for calculating gain (loss) is: Realized Gain (Loss) = Selling Price minus Adjusted Basis. Once the amount of Realized Gain/Loss is calculated, you must determine how much, if any, of it will be “Recognized” (i.e., how much of the gain will be subject to taxation, or, how much of the loss will be deductible). The general rule is that realized gain is recognized (the “all-inclusive” rule), but there are many exceptions. Assuming the gain/loss is to be “recognized,” the final step in the analysis is to determine whether the transaction is “ordinary” or “capital.” In many instances, capital gains are taxed at a rate lower that the rate on ordinary income. Also, capital losses have more limitations on deductions than ordinary losses. I. FIVE FUNDAMENTAL CONCEPTS IN PROPERTY TRANSACTIONS. (Ref. 10,001 & IRC Sec. 1001) A. Selling Price (Amount Realized) B. Adjusted Basis of the Property C.
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  • Fall '13
  • jackson
  • Accounting, Intervivos Gift Property

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