Property Rules Flashcards
1231
assets used in trade or business and held for more than 12 months
Losses on 1231
C Corps - only extent of cap gains
Individuals - $3,000 limit
Treated as an ordinary loss
Adj basis - sale price
Gains on 1231
C Corp - offset by cap losses
Individuals- taxed at pref rates (0,15,20)
First recapture depreciation as ordinary, then left over is a capital gain
section 1245 (gains only)
depreciable personal property used in trade or business - vehicles, computers, etc.
upon the sale of a 1245 asset
lesser of gain rec or accumulated depc is recaptured as ordinary income and remaining gain is a section 1231 gain
section 1250 (gains only)
depreciable real property used in trade or business for more than 12 months (warehouse or office building - NOT LAND)
section 291 depreciation recapture
for C corps, 291 applies to section 1250 assets sold at a gain…the amount of ordinary income = 20% of the lesser of recognized gain or the accumulated straight line depreciation taken on the asset. Any remaining is 1231 capital gain
section 1250 for individuals
gain is just a section 1231 gain
overall net section 1231 gain for the year for an individual
called an unrecaptured sectoin 1250 gain, to the extent of lesser of: gain recognized or accumualted dep taken on asset
related party transaction : sold higher than when given
you give to brother, then when brother sells to someone else he can use your orginal basis if it is sold even higher than that.