Studied by 0 people
Looks like no one added any tags here yet for you.
How do you calculate the net fair market value?
Fair Market Value of Assets
- Mortgage
+ Cash Needed
= Net Fair Market Value
What is the tax formula?
Gross Income
<Adjustments to Gross Income>
= Adjusted Gross Income
<Itemized Deduction>
<Qualified Business Deduction>
<Exemptions>
= Taxable Income
* Tax Rate
= Tax Liability
<Credits>
+ S/E Tax
+ Med. Tax
+ Alt. Min Tax
+ Net Investment Income Tax
= Tax
How do you calculate the realized gain?
Fair Market Value
- Adjusted Basis
= Realized Gain
How do you calculate the recognized gain?
Cash Received
+ Reduction in Debt
= Recognized Gain
How do you calculate the “check” park of a tax free calculation?
Recognized Gain
+ New Fair Market Value
- New Adjusted Basis
=/+ Future Gain
= Realized Gain
Code Sec. 1033
involuntary conversions occurring through casualty, theft or condemnation
What is qualifying like-kind property for involuntary conversions?
replacement property must be used in substantially the same way as the involuntary conversion property
What are some mandatory rules for involuntary conversions?
if the award is like-kind property, no gain is recognized
losses from business or income producing property are recognized
What are the two time limitations for involuntary conversions?
earliest date to replace and latest date to replace
Explain earliest date to replace involuntary conversion
earlier of:
date of acquisition of the involuntary conversion property
earliest date of threat of disposition
Explain latest date to replace involuntary conversion
within 3 years after the end of the taxable year in which gain is first realized
What are the holding period rules for involuntary conversions?
like-kind and non like-kind
Explain the “like-kind property received” holding rule for involuntary conversions
same as holding period of the involuntarily-converted property
Explain the “non like-kind property received” holding rule for involuntary conversions
begins on the day following the date of receipt
Explain gift sales
When a donor gives a donee a gift, the value of the gift is excluded from the donee’s income
Explain the gift tax rule
when a donee assumes a donor’s basis, the basis includes:
gift tax paid by donor * (FMV at gift date - donor’s basis at gift date)
Code Sec. 1221
includes investment property, personal use assets, and creative works only if created by someone other than the taxpayer
Explain the taxation of long-term capital gains
20% for singles with taxable income over $459,750 and for joint over $517,200
Explain the taxation of collectible gains
up to 28%
Explain the taxation of Sec. 1202 gains
up to 28%
Explain the taxation of un-recaptured Sec. 1250 gains
up to 25%
What are the 4 baskets to determine capital gains and losses
short-term gains/losses
28% long-term gains/losses
25% long-term gains
0/15/20% long-term gains/losses
Code Sec. 1231
business assets held over 12 months, includes depreciable personal and real property and land used in a business
Explain the purpose of Code Sec. 1245 Depreciation Recapture
to prevent taxpayers from taking ordinary depreciation deduction and then receiving long term capital gain treatment through Sec. 1231
Explain the type of property eligible for Sec. 1245
Sec. 1245 property held long-term is a subcategory of Sec. 1231. It includes depreciable personal property
Explain Sec. 1245 Depreciation Recapture
ordinary income is recognized to the extent of total depreciation taken
excess recognized gain is treated as Sec. 1231 gain
all losses are treated as Sec. 1231 losses
no recapture of depreciation as ordinary income when there is a recognized loss
What is the amount and tax effect of the exclusion of sale of a principal residence?
$250,000 (married filing jointly may exclude up to $500,000)
a permanent exclusion
What is the qualification for the sale of a principal residence?
own and use for an aggregate of at least 2 of the 5 years preceding the sale or exchange
not claim the exclusion during the 2 years immediately preceding the sale
Note
Flashcard