R2 Review Flashcards

1
Q

IF fair market value is above the basis

A

Gain is calculated by the difference between selling price and the basis

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2
Q

If fair market is under basis

A

if sold at a gain use the basis
if sold at a loss use FMV

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3
Q

A taxpayer’s basis in inherited property is

A

generally the fair market value of the property at the date of death

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4
Q

The de minimis safe harbor rule will applies when

A

does not have an applicable financial statement
This will allow a company to expense any items costing up to 2500 if it costs more than that then they cannot be expensed so the 2500 is not used for that item.

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5
Q

The capital loss deduction for individuals is limited to

A

$3,000 per year with the excess carried forward indefinitely

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6
Q

A gain on the sale of a personal-use asset is

A

A taxable capital gain. A loss on the sale of a personal-use asset is a nondeductible personal loss

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7
Q

What are capital assets

A

Assets held for use:
Investments (Stocks, bonds, virtual currency)
Personal use (Personal car, home, furniture)

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8
Q

What are non capital assets?

A

Inventory
AR’s arising from company services and the sale of inventory
Used in taxpayer’s trade or business (real property or personal property)

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9
Q

The recovery period for nonresidential real property is

A

39 years

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10
Q

The recovery period for residential real property is

A

27.5

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11
Q

To qualify for the IRC Section 179 expense deduction

A

the property must be tangible personal property or qualified real property improvements acquired by purchase from an unrelated party for use in the active conduct of a trade or business.

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12
Q

intangible assets

A

Customer lists, trade names and goodwill

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13
Q

Maximum deduction under section 179

A

1,220,000
Cannot be used top create an NOL or if there is already an NOL
Any purchase above 3,050,000 will have dollar for dollar face out.

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14
Q

Section 179 improvement to nonresidential property

A

Will be depreciable in one year if it is an interior improvement that was made after the building was placed in service

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15
Q

Section 179 improvement to residential property

A

Not deductible under 179

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16
Q

Basis depreciation for personal assets transferred to business use

A

Lessor of the FMV or original cost

17
Q

Bonus depreciation requirements

A

New or used business property with a depreciable life of 20 years or less
(Cannot be converted from personal use to business use)

18
Q

Depreciable property for gifts/inherited

A

Gifts = purchase price of the asset
Inheritance = FMV at transfer