Chapter 10 – Capital Gains And Losses And AMT Flashcards
A capital asset is any asset other than these 4 items.
- Accounts and Notes Receivable
- Copyrights/Creative Work
- Inventory (Stock In Trade)
- Depreciated real and personal property
ACID
ACI is Ordinary
D is Section 1231
The determination of whether a capital gain is short-term or long-term is important for individuals not for…
corporate tax papers.
In order for you to experience a capital gain or loss, there are must be a…
sale or exchange of some type of property.
Gain on a capital asset will be considered short-term gain if the property was held for…
one year or less.
Gain on the sale of a short-term capital is taxed at…
ordinary rates.
Long-term capital gain rates are taxed…
more favorable.
A gain on a capital asset will be considered long-term gain if the property was held for…
more than 1 year.
Real estate is taxed at a rate of ____%.
25%
Collectibles are taxed at a rate of ____%.
28%
Most longterm capital assets are taxed at a rate of ____%.
15%
Capital gains can be deducted in full against…
capital losses.
Net capital losses can be deducted against ordinary income up to $_________.
$3,000
If you aren’t able to deduct capital losses during the current tax year, then you can have them…
carried forward to the following years indefinitely.
The gain on the sale of a capital asset is taxed at…
ordinary rates.
Losses on the sale of a capital asset is fully deductible and is not subject to…
the $3000 limit.
Capital asset gains are taxed at __________ rates.
non-favorable
Capital asset losses are taxed at __________ rates.
favorable
Section 1231 assets (depreciable property) will always be taxed at favorable rates for both…
losses and gains.
Section 1231 property is what type of property?
depreciable
Section 1231 property must be held for more than 1 year and used for _____________ purposes.
business
If a Section 1231 property loss exceeds the gain, then entire net loss is treated as a ____________.
capital loss
If a Section 1231 property gain exceeds the loss, then entire net gain is treated as a ____________.
capital gain
The alternative minimum tax applies to 4 groups. Who are they?
C-corporations
individuals
trust
estates,
The alternative minimum tax is imposed on individual tax payers at a rate of _______%.
26-28%
Name the 8 adjustments that are taken out for AMT calculations.
itemized deductions standard deduction medical over 10% of AGI depreciation (MACRS) stock options exemptions/expenditures interest on non-governmental bonds (private activity bonds; airport/stadium) state and real property taxes
True or false. AMT exception amount is the exact same for individuals as it is for corporations.
False
AMT exemptions can be used for both…
individuals and corporations.
AMT exemptions can ___________ the alternative minimum tax amount.
reduce
What are the 5 tax credits that are not taken out for AMT?
FACBC
Foreign tax credit Adoption credit Child tax credit Business energy credits Charity Contributions
The corporate AMT rate is a flat ____%.
20%
Corporations are the only ones who have a special ______ adjustment.
ACE
How much income does a small corporation have to average for the first three taxable years to be considered a small corporation?
$5,000,000
Do small or large corporations pay AMT?
Large corporations ONLY!!
Is the interest paid on a savings account considered an adjustment when you calculate your AMT?
No
When calculating AMT, the exemption amount is eventually phased out for…
higher income taxpayers.
