R3 - Gains & Losses Flashcards
Section 1231
- Depreciable personal property used in business (i.e car, boat)
- PPE used in business
- Held for over 12 months
- Gains are treated as LTCG
- Losses are treated as ordinary losses.
Section 1245 (Machinery and Equip) >12 months
- Depreciable property used in business for over 12 mo
- Subj to depreciation recapture
Sec 1245 - Depreciation Recapture: Treated as ordinary gain
Lesser of:
- Gain Recognized
- Accum Depreciation
- Remaining gain is a Section 1231 gain
Section 1250
- Real Property used in business for over 12 mo
Sec 1250 - Depreciation Recapture: Taxed at 25%
- If Sec 1250, applied to Lesser of:
- Gain Recognized
- Accum Depreciation at SL
- Remaining gain is a Section 1231 gain
What is the tax rate for Unrecaptured Section 1250 Gain?
25% from depreciation of RE not treated as ord income
What is the tax rate for Collectibles and QSBS?
28%
Personal Bad Debt
Short-term when worthless
Worthless stock and securities
When totally worthless
Holding period of Short Sales
Starts when short sale is executed
Netting Process for individuals
ST
- ST
- 28%
- 25%
- LT
Netting Process for individuals
LT
- LT
- 28%
- 25%
- ST
Netting Process for individuals
28%
- 28%
- 25%
- LT
- ST
Netting Process for individuals
25%
No losses.
Capital Losses: C-Corp
- Can’t offset ordinary income.
- Flat rate applies.
- CB 3 - CF 5.
C-Corp 1231 treatment
- Loss can be used against ordinary income.
- Gain can be offset by capital losses.
Sec 1231 LBR
- If Sec 1231 loss taken in the past, must “pay back” with current year Sec 1231. If you had a benefit yesterday, it bites you in the butt today
Sec 291 - Only for C-Corps
- Applies to RE sold at a gain. No losses.
- Lesser of 20% Gain or 20% accum SL depr.
