property taxation Flashcards

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1
Q

what are capital assets?

A

most personal use assets and investment assets

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2
Q

what is NOT a capital asset?

A

inventory
depreciable property used in a trade or business
copyrights and creative works (if held by the creator of such works)
and
accounts and notes receivable

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3
Q

what are ordinary income assets?

A

those assets, when sold, result in ordinary income to the owner of the assets

ex: inventory, accounts receivable, creations in the hands of the creator, copyrights int he hands of the creator

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4
Q

what are section 1231 assets?

A

assets used in a trade or business - are depreciable property or real property

includes: timber, coal, iron ore, certain livestock, and unharvested crops

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5
Q

inherited property always has a holding period of….

A

long term

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6
Q

what is the general rule for the basis of gifted property?

A

the donee’s basis in the gifted property is the same as the donor’s basis in the gifted property

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7
Q

what are the exceptions to the general rule for the basis of gifted property?

A

if basis is lower than FMV at time of gift - then the basis is the FMV
- if the donee sells it later and it in between FMV and donor’s basis, there is no gain or loss recognized

if gift tax is paid, then the tax is added to the donor’s basis to determine the donee’s basis

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8
Q

what is the holding period for gifted property?

A

the holding period in the hands of the donee includes the holding period of the donor

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9
Q

what is the basis of property transferred between spouses incident to divorce?

A

treated the same as gifts - aka the carryover basis applies

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