R3 - Memory Flashcards
Memory
HE:Homeowners exclusion qualification
must have owned and used the property as a principal residence TWO years or more during the FIVE year period ending on the date of the sale or exchange by the tax payer. Periods of ownership use do not have to be continuous. EITHER spouse must meet the ownership requirement but both spouses must meet the USE requirement.
HE:homeowners exclusion limits
MFJ and certain surviving spouse - 500K
Single, MFS, and head of household - 250K
HE:Surviving spouse - homeowners exclusion
entitled to the full 500K provided house sold within two years of death
HE:Hardship provision - if you do not meet ownership test
number of months of qualifying over 24 months
The original exclusion is multiplied by this amount
HE:Reduced homeownership exclusion- Non qualified use
If you rent the house that is unqualified use , Period of rent over 4 years * gain will be included in your income
HE:hardship vs non qualified use
total exclusion vs gain
IC: Involuntary conversions ( replacement prop must serve the same function
Only taxed on the amount not reinvested
IC: Basis of the new asset
Old basis=new basis + any amount not reinvested
IC: personal property
reinvestment must occur two years from year end for principal residence its four years
IC: Condemned business property
reinvestment must occur Three years from year end
IC: Condemned business property basis
NBV of new property-deferred gain
IC Rules apply to gains only
only gains not losses
DC: Divorce property settlement
Nontaxable= NBV basis
EX : of like kind
like kind exchange of REAL property use in trade or business or held for investment. Note personal like kind does not qualify for non recognition treatement
EX : of like kind
Make sure you know what is real property vs personal property
EX: of like kind timing requirements
- Identify within 45 days that’s it like kind AND
- ## like kind prop must be received earlier of 180 days and tax return file date
EX: like kind gain
Boot/loot +FMV of Non-likekind property RECEIVED
EX: like kind gain
Gain is calculated based on the old property FV old- BV old .
EX: like kind gain - Realized vs recognized
Realized = Amt realized - adj basis
Recognized : Upto Boot/Loot Plus FMV on non inkind
EX: Like kind basis of prop received
- No boot , basis of prop received = basis of prop given up
- Boot, basis of prop receied = FMV of prop rec-Def gain + def losses
EX : like kind loss
- Not recognized only realized. All of the loss is deferred and increases the basis of the new property
EX : Amount realized
Amount realized: ( boot rec : Cash +FMV of prop rec+net relief from liability) - FMV of boot paid ( Cash +FMV of prop paid+net liability assumed)
Installment sales
Taxed when payment is received otherwise deferred
Treasury and capital stock transactions ) by corp
Corps are precluded from any tax benefits whether gain or loss resulting from dealing with own stock : sales of stock by corp, repurchase of stock, resissue of stock
Wash sale loss
Sold for a loss and is repurchased 30 days before or after the SALE DATE
Wash sale : basis of repurchased security
Purchase price + Disallowed loss
Wash sale : date of acquisiiton
Purchase date of original security
Make sure
you know the difference between a realized loss and a recognized loss
Related party transactions
Losses are disallowed
related party transactions
Basis are same as gift tax rules
Personal loss
No deduction allowed on personal loss , itemized dedu may be allowed on personal casualty losses
Character of gain or loss
When a tax payer disposes of property the gain or loss is classified as capital or ordinary . This depends on the nature of the asset disposed.
Capital assets
Personal auto, personal furniture and fix, interest in a partnership, goodwill of a corp, personal property not used in trade or business, stocks and securities of all types ( except those held by dealers), real property not use in trade or business, copywrigts, literary, musical or artisticial comps that have been purchases, other aassets held of investments
Reporting disposition of cap assets
form 8949
Non-capital assets
Inventory, depre personal property used in trade or business( 1231,1245,1250) May be capital or ordinary
non cap
opywrigts, literary, musical or artisticial comps that have been held by original artists ( Exception sales of music comp hely by original gets cap gains treatement)
non-cap
treasury stock
