Sales Disposition Flashcards
What are the 3 types of Categories of assets?
Ordinary, Section 1231, Capital
Define section 1231 assets
Depreciable property used in trade/business that have been owned for 1 year or more
Define Ordinary Assets
Depreciable property used in a trade/business and realty that have been owned for a year or less are ordinary assets
Define Capital assets?
Capital assets are defined as all those assets held by the taxpayer
Except:
Items listed as ordinary and Section 1231 assets
Examples of Capital Assets:
Property held for investment use and personal use, are capital assets.
Goodwill of a corporation is also a capital asset.
Donee
receiver of a gift
What is the donee’s gain basis in gifted property?
Donor’s adjusted basis
What are the donee’s loss basis in gifted property?
LOWER of:
1. FMV of date of gift
OR
2. Adj basis of donor
What are betty’s steps to decipher gift basis?
Step 1: Identify the gain basis and loss basis
Step 2: Determine/calculate gain/loss, if any
If the sale is in between the gain/loss then there’s 0 gain/loss
What are the basis rules for inherited property to the donee?
FMV basis to the beneficiary and a long-term holding period
How does one determine the basis of inheritances?
Fair market value;
Always long-term holding period (except for 2010 when there was no estate tax).
Holding period of gifted property for GAIN basis
The holding period of the property for the donee includes the holding period of the donor.
Holding period of gifted property for LOSS basis
The holding period of the donee begins on the date of the gift.
What is the basis when property is inherited?
FMV on the date of death or FMV on the alternate valuation date (6mos) (regardless if its your spouse)
What does basis mean????
original value of the assets for tax purposes used when your going to calculate any gain/loss
