SU # 6 - Property Transactions Flashcards
6.1 - Basis
Donor & Donee Basis for Gifts:
Identify the basis used for calculating gains and losses of gift property
- Gain - transfer basis is used (donee’s basis = donor’s basis)
- Loss - lower of donor’s AB or property FMV
6.1 - Basis
Gift Tax:
What is the formula to calculate gift tax
((FMV @ time of gift - Donor’s basis) / (FMV @ time of gift - Annual exclusion)) * Gift tax paid
OR
(Appreciation / Taxable gift) * Gift tax paid
6.1 - Basis
Gift Tax:
What is the annual exclusion for gift taxes?
$ 14,000
6.1 - Basis
Gift Tax:
Identify the formula to calculate new basis for gifts
Donor’s adjusted basis + Gift tax = New Basis
6.1 - Basis
Uniform Capitalization Rules:
The Uniform Capitalization Rules of Code Section 263A apply to retailers whose average gross receipts for the preceding 3 years exceed what amount?
$ 10,000,000
6.2 - Depreciation & Amortization
Recovery Periods:
Identify the recovery periods that use the 200% declining balance
3, 5, 7, and 10 year recovery periods
6.2 - Depreciation & Amortization
Recovery Periods:
What is the declining balance percentage for 15 and 20-year properties?
- 150% declining balance
6.2 - Depreciation & Amortization
Depletion:
Calculate depletion deduction
(Adjusted basis in mineral property / Estimated mineral units available @ year’s start) * mineral units sold during year
6.2 - Depreciation & Amortization
MACRS Depreciation Methods:
Calculate the 5 methods of depreciation under the MACRS methods
- Straight line
- 150% declining balance
- 200% declining balance
- Units of production method
- Operating days method
6.2 - Depreciation & Amortization
MACRS Depreciation Method:
Calculate S/L method of depreciation
Annual allowable amount = ((depreciable base - salvage value) / useful life))
6.2 - Depreciation & Amortization
MACRS Depreciation Method:
Calculate allowable depreciation using 150% declining balance
Adjusted basis * (150% / useful life)
6.2 - Depreciation & Amortization
MACRS Depreciation Method:
Calculate allowable depreciation using the 200% declining balance method
Adjusted basis * (200% / useful life)
6.2 - Depreciation & Amortization
MACRS Depreciation Method:
Calculate allowable depreciation using the Units of Production method
(Basis - Salvage Value) * (# units produced during tax year / estimated total units asset will produce)
6.2 - Depreciation & Amortization
MACRS Depreciation Method:
Calculate the amount of allowable depreciation using the Allowable Days Method of depreciation
(Basis - Salvage Value) * (# days used during tax year / estimated total days asset can be used)
6.2 - Depreciation & Amortization
Mid-Quarter Convention:
How do you calculate the mid-quarter convention for 1st-year depreciation?
Full year amount * % based on quarter asset placed in service
