S code 1222 other terms relating to capital gains and

for longer than 1 year per 26 U.S. Code § 1222. Other terms relating to capital gains and
losses.
( 3)Long-term capital gain
The term “ long-term capital gain ” means gain from the sale or exchange of a capital
asset held for more than 1 year, if and to the extent such gain is taken into account in
computing gross income.
(4)Long-term capital loss
The term “ long-term capital loss ” means loss from the sale or exchange of a capital
asset held for more than 1 year, if and to the extent that such loss is taken into account
in computing taxable income.
Next, we will need to i dentify the tax consequences on the sale or exchange of
the land consistent with capital gain rules. Consider the selling expense, broker’s
fees, closing costs, appraisals, and surveys and the correct schedule form to
complete.
The tax consequences of the disposition of Bob’s land is that the gain will be taxed as
net long-term gain rather than ordinary income under U.S. tax code Sec. 1231 gain.
The gain will be reported on IRS Form 4797, Sales of Business Property and then will
flow to Schedule D (Form 1040), Capital Gains and Losses.
All selling expenses, broker’s fees, closing costs, appraisals, and surveys can be
included as the basis for the property. This will lower the reportable gain.

Describe the after-tax effects on the client’s cash flow based on the sale of the
land that is needed to provide the funds necessary to start the business.