chapter 7
Property Dispositions
CHAPTER OUTLINE
Setting the Stage—An Introductory Case
Determining Gain or Loss on Dispositions
Disposition of Section 1231 Property
Disposition of Ordinary Income Property
Special Rules for Small Business Stock
Sale of Principal Residence—Section
Expanded Topics—Individual Capital Gains Tax Rates
Revisiting the Introductory Case
Determining the final treatment of a property disposition requires navigating a complex set of definitions, netting procedures, and potential alternative tax rates. It starts with identifying the three types of gain (income) or loss that can be recognized on property dispositions: ordinary gains and losses, Section 1231 gains and losses, and capital gains and losses, each corresponding to asset classifications as ordinary, Section 1231, and capital. Gains (income) or losses classified as ordinary are included in operating income. Section 1231 gains and losses are first netted against each other. Net losses are deducted directly from ordinary income, but net gains are included in the netting of capital gains and losses. After these gains are netted with all other capital gains and losses, the net capital gains may be included directly in income or taxed at more favorable rates, depending on the taxpayer and the length of time the property had been held prior to disposition. ...
Get Taxation for Decision Makers, 2012 Edition now with the O’Reilly learning platform.
O’Reilly members experience books, live events, courses curated by job role, and more from O’Reilly and nearly 200 top publishers.