tax 171

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  1. amount realized
    cash + FMV of noncash property received + liablities seller is relieved of - selling expenses
  2. adjusted basis
    cost (or other basis at acquisition) + capital additions - capital recoveries (depreciation)
  3. 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. 4 basis rules Methods of Acquistion
    • purchase=cost
    • gift=2 basis gain and loss
    • decedent=FMV
    • conversion of personal-use property to business-use property= 2 basis gain and loss
  5. acquisition by purchase
    • basis=cost ¬†
    • stock purchased at different times and prices must document which one sold or assume fifo
    • Lump sum purchase=
  6. 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
  7. Realized losses are not recognized unless
    • A trade or business loss
    • a loss of an activity entered into for profit
    • a casualty loss
  8. gift tax for Gain
    unrealized appreciation/FMV-14,000
  9. Donee's basis for Depriciation
    • for business, trade, or investment
    • depriciation basis for property acquired by gift= basis for gain
  10. acquisition by Decedent
    Basis in property= Property's FMV on decedents date of death
  11. Conversion of Personal-Use property to Business Property
    • Dual-basis
    • Basis for gain= property's adjusted basis @ date of conversion
    • Basis for Loss
  12. Exceptions to General Recognition Rules
    • Like-kind exchanges
    • involuntary Conversions
    • Sale of Taxpayer's Principal Residence
  13. Like-Kind Exchange
    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.
Card Set
tax 171
tax 171 chapter 7-9
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