Property Tax

Question 1

What is the basis/holding period for gifts

Answer 1

Basis = carryover basis from giftor + gift tax. Use original holding period

Question 2

What is the basis/holding period for inheritance

Answer 2

FMV at date of death or alternative valuation date. Always long term holding

Question 3

Rules for calculating gain or loss on sale of a gift

Answer 3

Question 4

When do you capitalize improvememnts

Answer 4

Expense up to $5,000 on audited Financial Statements. $2,500 on unaudited

If over capitalize entire cost

Question 5

What are the capital loss rules

Answer 5

• NOL offsets 80% of income with indefinite cf
• Individual capital loss: $3,000 with indefinite cf
• Corporate capita losses cannot be deducted in current year, 3 year cb, 5 year cf

Question 6

What basis do you use when selling an asset

Answer 6

Adjusted basis of asset sold
Purchase = Cost
Gift = rollover cost
Inherited = Step-up FMV

Question 7

How to calculate amount realized on disposition of an asset

Answer 7

Money Received
Canceled Debt (COD)
FMV Property
(Selling Expense)

Question 8

What is the home owner’s exclusion rule

Answer 8

Must be owned and used 2 out of the last 5 years. Can exclude taxable gain up to 250k Single 500k MFJ

Question 9

Convention rules for depreciation

Answer 9

• Half-year: Personal property (machinery and equipment) in year you buy and sell
• Mid-quarter: If more than 40% placed in service last quarter
• Mid-month All residential real property for month placed in service

Question 10

What is Section 179 depreciation

Answer 10

“In lieu of depreciation up to $1,160,000
Reduced $ for $ of prop put in over $2,890,000”

Question 11

How do you treat wash sales

Answer 11

“Repurchased 30 days before or after
Basis of repurchased = purchase price + disallowed loss”

Question 12

How is gain recognized on like kind exchange when boot is received

Answer 12

⇒ FMV of new property + Boot Received – Basis of Property Given up - Boot Given