Property Flashcards
Gift basis
Gain - use DB
Loss - use the lesser of DB or FMV at time of dist
DB HOLDING
Business gift basis
Whichever is lower - DB or FMV
Unless related party
Donor basis with gift tax
Gift tax paid x (FMV-DB)/(FMV-14,000)
Uniform capitalization rules
All direct and indirect costs are capitalized - unless
RETAIL, passed 3 yrs
Depreciation $basis of a gift
Transferred basis less gift tax
Versus adjusted basis:
Includes assessments legal fees to defend title
Stock basis time
Old date
Stock splits - Old basis/new number of shares
MACRS recovery periods
3- tools 5- cars,computers, office machinery 7- office furniture, other machinery 10 - boats, food and tobacco plants 15 - data communication plants, phone sewage billboards 20 - utilities city sewers
Section 179
Recapture 1245
Acquired unrelated party
25,000 on 200,000
2014 - use 500 on 2mil and add bonus depletion
ADS % and requirement
5-cars
10- personal property
15- agriculture
20- real estate
Required for listed, tax exempt,outside us, disc-imports
Bonus depletion - first year
\+ sect179 50% of Agi Purchased - 2007-2014 Used for 50% - 2014-2015 Used for 100% - 9/2010-2011
Capital assets
For investment
Not business related
Dividends and basis
Div do not decrease basis
Excess of earnings = capital gain
LT CAP BASKETS
0 - 15% tax bracket 37k 15% - 33% tax bracket 411k 20% - 39.6% tax bracket 25% - 25% on unrecaptured 1250 gains 28% - sale of collectibles & 1202 stock
Stock 1244
Small business 1st owner on worthless - NOL PURPOSES
50,000 per tax payer
Cap
If gain = 50% recognized
Market discount bonds
Market discount x (# days held/ # days on bond)
Related party’s
Relative - not aunt uncle cousin or in laws
Use disallowed loss - not holding period
Installment sales
One payment - sale deferral, residential timeshare, def tax and prop used in farming
NOT INVETNORY, dealer dispositions, sales with escrows
5yr uncollected loan - unrelated
ST CLOSS- no business bad debt
Stock repurchase w/in 30 days
The disallowed loss - is added to the stock basis!
Property basis
Price and costs to acquire
NOT REBATES
Installment sales - realized gain
Gross profits x (payments recvd current yr / total contract price)
Installment sales - recognized gain
Gross profit ratio x payments recvd
Installment sales - gross profit ratio
Gross profit / contract price
Gross profit = sales price - expenses - adjusted basis
Installment sales repossession
Recognize the lesser of :
Cash + other FMV in excess of gain already rec
Or gross profit in installments less repossession costs
Interest on def tax obligations : nondealer ar > 5 mil from IS DURING YR OF > 150k
Sec 1031 like kind exchanges
Gain recognized: the LESSER
GAIN REALIZED OR BOOT RECVD
Realized gain = total value received - total value given
Boot = other property + liability given up
New basis = old basis + recognized gain + boot received - loss
Net the mortgage = net boot paid IGNIRE IT FOR REALIZED GAIN
DO NOT SUBTRACT BOOT PAID AMT FROM MORTGAGE
IT AFFECTS THE NEW BASIS - not the gain realized
New basis : old basis + boot paid (mortgage assumed) + cash + unlike property - gain recognized - boot received
Back taxes on property for purchase
Add to basis
Inheritance
LT cap gain
FMV at time of death or 6 mo later
Sell between for current FMV
Like kind exchanges do not include…and can only be recognized with…
Us -
No inventory
Involuntary conversions
No gain if complete conversion
Recognized gain = LESSER
Realized gain or $ not reinvested
Basis = amt reinvested - deferred gain(realized gain-not reinvested)
Wash sale
Unalloyed loss + basis of new stock purchase and old holding period
Related party
Siblings, spouse, children, parents, SH > 50% No loss Recognize gain!!!,! Disallowed loss - forwarded Holding period - new
1231 property - casualty loss on personal property of co is investment property
St = ordinary income
1231 = real or personal business property held > 1 yr
Casualty loss = net loss = ordinary loss
If gain = combine with all 1231 gains
If 1231 losses are > gains = Ordinary loss
If gain = LT capital gain
1245 depreciation recapture
1245 - depreciable personal property
Gain to extent of depreciation = ordinary income
Lesser of : ALL DEPRECIATION or REALIZED GAIN
Gains > depreciation = LT gain
No 1245 LOSSES
1250 real property
€land, leases or buildings - Gains = ordinary income
SL €11250
Remainder is 1231 gain
Gifts exclusions:
Gift requirement
estate tax exclusion
Persons estate
- Exclude all direct payments to a charity, hospital, university
- If: present (full control, now) - exclude 14k person
Must file if > 14k or is taxable
Estate tax exclusion = 5.43mil
Persons estate = life ins proceeds + 1/2 marital prop
Net estate tax
Gross estate tax + UNIFIED CREDIT (5.43m)
Gst and estate tax
2015 both exemptions are the same
5.43 mil with 40% tax on overage
Like kind w mortgages
FMV new Mort old Cash rec LESS Basis old Mort new Cash giv
Parking garage
Store business prop
Sect 1231 and land = 1231
Stores do not include land
Asset classification : Capital Sec 1231 Other NA
Capital : personal residence, stocks,
Sect 1231: parking lot, building, acquired goodwill
Other : inventory, furniture
NA : treasury stock
Estate executioner
Files final account of admin to the state
Fed estate tax credit may be reduced by
Foreign death taxes and tax on prior transfers
Estate: joint tenants and right of survivorship belongs to
Revocable
Does not split value with other than wife
Revocable trusts are included inestate
State death taxes paid by the estate are an allowed deduction
Funeral expenses
Deductible by estate only
Gift of interest
Is a present value
Unified credit
Includes all other tax considerations
Not an a and b
, just an a
Both lifetime and gift taxes are taxed on a cumulative basis
Federal estate tax return due
9 mo
Couple give two gifts - one for 17 k another for 20k what is taxable
WHusband and wife give gifts - each gift if each is split has an exlusion of $28k
Section 267
The buyer cannot deduct expense until seller reports income
Cash seller - accrual buyer
Corp ST LT Treatment
Net LTL is added to net STL
Cap losses 3k 3b5f
Mineral assets sold in place - what kind of assets
Capital assets
Compare Apt building & unimproved land
Like kind exchange
No capital interest
Exclusion for the two year residence gain exclusion
Prorate the benefit and apply to the gain
IF DUE TO EMPLOYMENT HEALTH OR UNFORSEEN CIRC
Amort 15 yr
Sec 197 intangibles
If you Elected to amortize the bond premium that yield taxable interest
Bond basis is reduced
MACRS 7 yr property - 1st yr deduction
14.29%
Depreciation order
Sect 179, reduce bal and do a MACRS
MACRS % calc
SL = 20% = 1/5 MACRS = 2/5 Mid qtr = 1.5/12, 4.5/12, = MACRS =40% x 5yrsx100%= 20% which leaves 80% Yr 2= 40%x(80%) = 32% which leaves 48% Yr 3= 40%x(48%) = 19.2% Yr 4= 40%x(19.2%) = 11.52%
Depreciation conventions
Mid yr
Mid qtr - if use, then ALL USE
Mid mo
Mineral / gas plant property % depletion
15%
Covenant not to compete amortization
15% sec 197 - gold silver copper
Clay mining depletion
5 or 7.5%
