R2 Review Flashcards
IF fair market value is above the basis
Gain is calculated by the difference between selling price and the basis
If fair market is under basis
if sold at a gain use the basis
if sold at a loss use FMV
A taxpayer’s basis in inherited property is
generally the fair market value of the property at the date of death
The de minimis safe harbor rule will applies when
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.
The capital loss deduction for individuals is limited to
$3,000 per year with the excess carried forward indefinitely
A gain on the sale of a personal-use asset is
A taxable capital gain. A loss on the sale of a personal-use asset is a nondeductible personal loss
What are capital assets
Assets held for use:
Investments (Stocks, bonds, virtual currency)
Personal use (Personal car, home, furniture)
What are non capital assets?
Inventory
AR’s arising from company services and the sale of inventory
Used in taxpayer’s trade or business (real property or personal property)
The recovery period for nonresidential real property is
39 years
The recovery period for residential real property is
27.5
To qualify for the IRC Section 179 expense deduction
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.
intangible assets
Customer lists, trade names and goodwill
Maximum deduction under section 179
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.
Section 179 improvement to nonresidential property
Will be depreciable in one year if it is an interior improvement that was made after the building was placed in service
Section 179 improvement to residential property
Not deductible under 179
