Topic 5 Property Transactions Flashcards
Investment held for appreciation purposes is known as _______ ______.
Capital Assets
________ assets are any asset other than: asset used in trade or business; accounts or notes receivable acquired in business from sale or services or property; inventory
Capital
The sale of capital assets generates _______ gain or loss
capital
The amount realized from the sale of a capital asset is the proceeds (less/plus) broker’s fees and selling costs.
less
The _____ of a capital asset includes costs of acquisition and other costs to improve the asset
basis
Stocks are sold by the ____ method, unless basis is tracked by specific shares, then can use ________ ______________ method
FIFO; specific identification
When a taxpayer sells a capital asset for more than its tax basis it is a capital (gain/loss)
gain
A gain on a capital asset held for 1 year or less is a _____-____ capital gain
short-term
Short-term capital gains are taxed at ________ rates
ordinary
Capital gains are ______ and ___ capital gain is taxed at the ____________ rate
netted; net; preferential
Preferential rates of __/___/___ depend on the taxpayers ______
0%/15%/20%; income
Depreciation recapture on real property is section ____ recapture and taxed at a max rate of ___%
1250; 25%
Long-term capital gains from collectibles held for more than _ ____ and qualified small business stock held for more than _ _____ are taxed at a max rate of __%
1 year; 5 years; 28%
When a taxpayers sells a capital asset for less than its tax basis it is a capital (gain/loss)
loss
Net capital losses are limited to a deduction of $_____ against ________ income
$3,000; ordinary
Capital losses not deducted carries over ____________
indefinitely
The first step in netting capital gains and losses is by netting all _____-____ items including any ____ ______ .
short-term; carry forward
After netting short-term capital asset items the taxpayer need to separate ____-____ capital items into three ____ ______ and sum gains and losses within each group
long-term; rate groups
What are the three rate groups?
1) 0/15/20;
2) 25% §1250
3) 28% collectibles
A net short-term loss will be netted with long-term (gain/loss) in the ________ rate group first
gain; highest
When you have losses for short and long term you need to _______ the character of the losses as they are carried forward.
maintain
Placing losses into a year when you don’t have sufficient gains to offset it, creating a carry forward is known as what doctrine?
Constructive Receipt doctrine
Recognizing income when there are no restrictions on the use of the income is known as what?
Claim of Right
When a loss is disallowed because the taxpayer purchases the same or “substantially identical” stock within a 61-day period centered on date of sale (30 days before and after day of sale) is called what?
“Wash Sale” Rules