Property Flashcards
Like kind exchanges
What is the gain realized, gain / loss recognized, and basis of new property when boot is PAID
Amount realized = (FMV of property received - boot paid) - adjusted basis of property given up
Gain / Loss Recognized = less of realized gain or boot received
Basis of new property = adjusted basis of property given up + boot paid
Like kind exchanges
What is the gain realized, gain / loss recognized, and basis of new property when boot is RECEIVED
Gain realized = FMV of new property + boot received - adjusted property given up
Gain recognized = lesser of realized gain or boot received
New basis = adjusted basis of property given up + gain - boot received
What are key words for an asset to be a capital asset?
Investment and personal use
When is a corporate a related party of a shareholder
A corporation and a shareholder are related parties when the shareholder owns 50% or more
What is the installment method and how do you determine gain recognized in the year of sale?
Under installment method, revenue is reported over the period in which the cash payments are received
- The amount of cash received is multiplied by the gross profit percentage on the sale to determine revenue
Gross profit percentage = realized gain / Selling Price
Gain recognized in the year of sale = cash received x gross profit percentage
What is the max amount of capital loss that can be taken in a given year
3,000 —> the remainder is carried forward
What is there is a loss when you are using installment sales method?
There are no losses in installment sales. You would recognize the full loss immediately
What are the rules around 179 in regards to buildings and land
1) Section 179 does not apply to land
2) Buildings usually do not apply for 179 but an exception is made for Qualified improvement property if an improvement is made AND the building is non-residential
