Property Tax Flashcards
What is Real Property?
Land and all items permanently affixed to the land
What is Personal Property?
All property not classified as real propert
What are Capital Assets?
- Personal automobile
- Furniture and fixtures
- Stocks and securities
- Personal property not used in trade or business
- Real property not used in trade or business
- Partnership interest
- Goodwill of corp
- Copyrights, literary, musical or artistic compositions (purchased)
- Other assets held for investment
What are Noncapital Assets?
- Property normally included in inventory or held for sale to customers in the ordinary course of business
- Depreciable personal property and real estate used in a trade or business
- Accounts/Notes receivable
- Copyrights, literary, musical or artistic comps (inventory)
- Treasury stock
Amount realized calculation
FMV new property + Boot received - adj basis
Amount recognized is..
Lessor of:
Realized gain OR Boot received
Basis of new property
Adj Basis given up + Gain recognized - boot received
Gifted property basis for gain/loss purposes
GR: Donor’s cost basis rollover
Exception: If FMV is lower than Donor’s Basis on date of gift, the basis for the donee depends upon the donee’s future selling price of the asset.
Sale of gift at price greater than donor’s rollover basis
The gain shall be the difference between the sale price and rollover basis
Sale of gift at price less than lower fmv
The basis of the gift for purposes of determining the loss is the fmv at the time gift was given
Sale of gift at price between donor rollover basis and lower fmv
Basis is deemed to be selling price
Holding period of gift
Normally - carryover
If fmv at time of gift is used, holding period starts on date of gift
Inherited Property Basis
GR: Date of death FMV becomes basis (stepup or stepdown)
ALVD: fmv on alternate date. Only available if its use lowers the entire gross estate and estate tax
Holding period of Inherited property
Automatically considered to be long term
When is gain not recognized on transactions?
when the taxpayer can HIDE IT
- homeowners exclusion
- involuntary conversion
- divorce property settlement
- exchange of a like-kind business/investment assets
- installment sale
- treasure and capital stock transactions
Homeowners exclusion calc
Selling Price (Basis) =Realized Gain (excluded amount) =Recognized Gain
Excluded amt = $250,000 single/$500,000 mfj
Involuntary conversions
Gain is only recognized to the extent that proceeds are not reinvested. Loss is NEVER recognized
When does a wash sale exist?
When a security is sold for a loss and is repurchased within 30 days before or after the sale date
What is considered a related party?
- Brother/sister
- Husband/wife
- Lineal descendants
- Entities >50% owned by ind/corp/trust/partnership
Related party holding period
starts with the new owner’s period of ownership
Individual capital gain and loss rules
long term - 20% max
short term - ordinary income
individual capital gain/loss carryover rules
$3,000 max loss deduction per year. No CB, CF indefinitely
Corporation capital gains and loss rules
net capital gains are added to OI and taxed at reg tax rate
losses may not be deducted against OI. CB 3/CF 5 years as short-term cap loss
MACRS: half-year convention
Applies to personal property, that is treated as having been placed in service or disposed of at the midpoint of the year
