Nonrecog. of Gain / Loss & Cap. Gain / Loss
Nonrecog. of Gain / Loss
- Sit. 4 Nonrecog.
- T's Position Not Change Much
- Good Policy T Not Have 2 Recog. Gain / Loss
- Nonrecog. of Exch. § 1031
- Exch. of Like Prop.
- Held 4 investment / prod. 4 use in trade / busi.
- Consid. fn. & use 4 det'ing like kind
- Time limit
- Must desig. prop. w/in 45 days of exch.
- Must B bought & turned over in 180 days
- Not apply 2 stocks & bonds
- Not recog. either 4 gain / loss
- Non Like Kind Prop. / Boot
- Cash / other prop. exch'ed, recog. gain 2 recipient but not
exceed sum of such $ & fair mkt value of prop. § 1031)b
- Carry over basis 4 exch'ed prop.
- If there's boot, allocate basis btwn like v. non like
- Basis 4 exch'ed prop. is basis - boot + recog. gain
- Basis of boot is fair mkt value
- Nonrecog. of Invol. Conversion § 1033
- Applies 2
- Acts of nat.
- Somebody committing tort & recov. $
- Condemnation of prop. & compensated / rsbl threat of condemnation
- Invol. Conversion of Prop.
- Not recog. gain if reinvest proceeds 2 prop. of similar in
use / serv. & in fn. w/in 2 yrs.
- Recog. 2 extent amt realized on exceeds cost
- Carry over basis § 1033)b
- Qualified Small Busi. Stock § 1045
- Carry Over Basis
- Held 4 6 Mo's
- Marriage & Divorce
- Transf's Btwn Spouse / Divorcees § 1041
- Gifts so no recog. of gain
- Anything w/in 1 yr. is incident 2 divorce
- Carry over basis
- House § 121
- Not Recog. Gain from Home Sale
- Excl. perm'ly $250k / person if T's princ. res. 2 out of 5
yrs. before sale
- Not Recog. Loss Deduction
- Disadv's 2 Renters & Home Offices
Cap. Gain & Loss
- Pref. Cap. Gain Treatment
- Mechanics of Cap. Gain & Loss § 1222
- If hold more than 1 yr., long term cap. gain
- All short term cap. gain + all short term cap. loss = net
short term cap. gain / loss
- All long term cap. gain + all long term cap. loss = net long
term cap. gain / loss
- Net long term cap. gain - net short term cap. loss = net cap.
gain which gets pref. treatment
- Cap. Assets
- Def. of Cap. Asset § 1221: T's Prop. Except
- Inventory / prop. 4 sale 2 customers,
- Copy rt., lit., etc. created by pers'al effort
- Acct's receivable in trade / busi.
- Pub. of US govt
- Prop. used in trade / busi. subj. 2 depreciation / real prop.
in trade / busi.
- Could B cap. asset if more gain than loss § 1231
- If loss exceeds gain, then ord. loss § 1231
- Det'ing Cap. Asset
- Should label prop. 4 investment v. not (§ 1236 4 sec.
- If hold real prop. 4 investment, safe harbor if hold 5 yrs.,
subdiv. w/o maj. improvement, & not in real estate §
- Future K's
- Jud'al Exceptions of Not Cap. Assets
- Not cap. asset if rent is ord. income in cancelling lease
& getting $
- Collapsible corp. where paid 4 compensation in buying stock
- Using image by licensing / selling, then not cap. asset
- Future K's 4 inventory / integral part of what corp. is doing,
not cap. asset
- Depreciable Tangible Prop.
- To extent T sells asset, gain attributable 2 depreciation
deduction treated as ord. income § 1245
- Depreciable Real Prop.
- To extent depreciation exceed accelerated depreciation §
1250 but now use straight line so not applicable anymore
- Limited Loss Deductibility § 1211
This material is copyrighted by the author. Use of the material
for profit without written permission from the author is
Go Back to
Law School Notes
December 8, 1997
Ms. Haeji Hong