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cash + FMV of noncash property received + liablities seller is relieved of - selling expenses
cost (or other basis at acquisition) + capital additions - capital recoveries (depreciation)
General recognition rules. Realized losses are not recognized unless the loss is?
- 1. trade or business loss
- 2. A loss of an activity entered into for profit
- 3. casualty loss.
4 basis rules Methods of Acquistion
- gift=2 basis gain and loss
- conversion of personal-use property to business-use property= 2 basis gain and loss
acquisition by purchase
- stock purchased at different times and prices must document which one sold or assume fifo
- Lump sum purchase=
acquisition by gift
- dual-basis approach
- donee's basis for gain= Donor's adjusted basis in the property (carryover basis)
- Donee's basis for loss= losser of doner's adjusted basis or FMV on date of gift
Realized losses are not recognized unless
- A trade or business loss
- a loss of an activity entered into for profit
- a casualty loss
gift tax for Gain
Donee's basis for Depriciation
- for business, trade, or investment
- depriciation basis for property acquired by gift= basis for gain
acquisition by Decedent
Basis in property= Property's FMV on decedents date of death
Conversion of Personal-Use property to Business Property
- Basis for gain= property's adjusted basis @ date of conversion
- Basis for Loss
Exceptions to General Recognition Rules
- Like-kind exchanges
- involuntary Conversions
- Sale of Taxpayer's Principal Residence
Section 1031: No gain or loss shall be recognized on the exchange of property held for productive use in a trade, business, or investment if property is exchanged solely for property of a like-kind to be held for trade, business or investment.
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