Property Tax Flashcards
What is considered adaptation
It is when property is used for a new or different use that originally intended
Example - converting a machine for another purpose
CAPITALIZE costs
What is betterment
This is when you make something bigger, better or faster
CAPITALIZE costs
What is restoration
Restore something to its original basis by replacing or fixing major parts
CAPITALIZE costs
What are capital assets
This is all property held by a taxpayer
What are a canvas portrait of a client in the hands of the painter considered
inventory - ordinary asset
What are depreciable fixtures in a business parking lot
depreciable property used in business and real estate
What is accounts and notes receivable arising from sales or services; copyrights, literary, musical, or artistic compositions; or treasury stock.
property used in business 1231 Asset
for related party transactions - what defines constructive ownership
Include is an individuals family
sibling
parents
spouse
kids
What are the 1231 rules
If 1231 is held for LESS than 1 year
BOTH gain and losses are ordinary
If 1231 is held for MORE than 1 year
LOSS - is ordinary
GAIN - is capital Gain that goes to schedule D
What is the special rule for listed securities for cash based tax payers
For securities gains and losses will be realized on the trade date on a year end sale of listed stocks
What is a like kind exchange
This is said to have occurred when property used in a trade or business or held as an invested is exchanged for other property of the same type
Example - real property
a vacant lost for a corporate office building
This is a non-taxable event
can you exchange inventory in a like kind exchange
no
can you exchange stocks, bonds, notes, convertible securities as a like kind exchange
no - securities are specifically excluded
can you exchange partnership interest in a like kind exchange
no
can you exchange property held for personal use in a like kind exchange
NO
Can you exchange an apartment building for unimproved land in a like kind exchange
YES they are considered the same class of property
What is the rule about selling a house that is your primary residence
single 250 MFJ 500
Must use it as you primary residence for 2 of the last 5 years
It you have to sell sooner that that because of a change in jobs or health etc - then this would apply as well
The result is that there would not be a any gain recognized
Who is subject to the uniform capitalization rules
They apply to a taxpayer who makes real or tangible personal property used in trade or business
or for real or personal property, tangible an din tangible personal property acquired for resale if gross receipts are greater than 10 Million in last 3 tax years
What are the UNICAP rules
you must capitalize direct costs and allocable portion of indirect costs that are part of the production or resale activity
These cost are capitalized into inventory
What is the definition of a capital asset
ALL property held by the taxpayer except
Inventory Depreciable property or real estate used in business A/R or N/R Copyrights Artistic creations Treasury Stock
What is inventory, A/R, artistic works, N/R considered
They are “hot Assets”
Ordinary Assets
Used in less than 1 year
Taxed at the ordinary tax rate
What are marketable l securities considered
Capital Assets
What is treasure stock considered
Ordinary Asset
What is the qualified small business stock exclusion
If you are a non corporate shareholder go a qualified small business stock for at least 5 years
Then you can exclude any gain
ceiling GREATer of 10X basis or 10M minus previous exclusions
