For the individual taxpayer all gain recognized is 15 percent gain if 15 year

For the individual taxpayer all gain recognized is 15

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For the individual taxpayer, all gain recognized is 15-percent gain if 15- year, 18-year, or 19-year real 39. property under ACRS is depreciated on a straight- line basis. For individuals, the deduction for capital losses is limited to the capital gains included in gross income plus 40. $3,000; any unused capital losses are carried forward fi ve years. When the basis of the taxpayer’s property is determined in whole or in part by reference to another asset, 41. the holding period of the taxpayer’s property includes the holding period of the other asset. The disposition of inherited property results in long- or short-term gain or loss, depending on the actual 42. time the taxpayer holds the property or the decedent had held the property. If a business elected or was required to use straight-line depreciation under the alternative depreciation 43. system for personal property, only a percentage of straight-line depreciation taken is subject to recapture as ordinary income.
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587 Testbank © 2010 CCH. All Rights Reserved. Chapter 12 If the property sold in an installment sale is subject to depreciation recapture, the tax law requires that 44. a portion of the amount of depreciation recapture be recognized as ordinary income in the year of sale, depending on the amount of cash the taxpayer receives during the year. The tax laws require that net Section 1231 gain be recaptured as ordinary income to the extent that the 45. taxpayer has nonrecaptured Section 1231 losses from the previous fi ve tax years. Ralph Robinson has a long-term capital loss of $3,000, a short-term capital loss of $2,000, a short-term 46. capital gain of $1,000 and taxable income of $12,500. His deductible capital loss is $2,500. Susan Short had net long-term capital losses that exceeded the $3,000 capital loss limitation. The unused 47. portion may be carried over as a short-term capital loss. Capital gains and losses generally do not result unless there is a sale or exchange. An exception to this rule 48. occurs when an investor holds corporate stock that becomes worthless. A real estate dealer who holds property as part of his stock-in-trade is not subject to capital gains treatment 49. of gains and losses on the sale of the property. Even though a husband and wife fi le a joint return, each spouse’s capital gains and losses are separately 50. calculated. In the case of an individual taxpayer, unused capital losses may be carried forward for an unlimited number 51. of years. An individual taxpayer with $10,000 of surviving short-term capital loss may deduct no more than $3,000 52. of the loss against ordinary income during any single tax year. Individuals are entitled to a 50% capital gains deduction. 53. George Grant runs a hot dog stand. During the year, he sells an oven and a refrigerator that were used in his 54. business and held for fi ve years. He had a gain of $500 on the oven and a loss of $1,000 on the refrigerator. If these are his only sales or exchanges during the tax year, George will treat the gain as long-term capital gain and the loss as long-term capital loss.
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