Property Transactions

Question 1

Define “Long Term Holding Period.”

Answer 1

More than 1 year.

Question 2

How does one determine the basis of gifts?

Answer 2

1. Generally have a carryover basis;

2. A gift with adjusted basis > Fair Market Value (FMV) takes FMV basis if property is sold at a loss.

Question 3

Define “return on capital.”

Answer 3

The cost of goods or property sold is recovered before any gain is realized.

Question 4

Define “capital assets.”

Answer 4

Personal assets or investments (non 12331 and non ordinary assets)

Question 5

Define “Section 1231 assets.”

Answer 5

Realty and depreciable property used in a trade or business owned more than one year.

Question 6

How does one determine the basis of inheritances?

Answer 6

1. Fair market value;

2. Always long-term holding period (except for 2010 when there was no estate tax).