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Found of Taxation
Chapter 8: Property Dispositions
| Term | Definition |
|---|---|
| Realized gain or loss | the positive or negative difference between the amount realized on the disposition of property and the adjusted basis of the property |
| recognized gain or loss | realized gain or loss taken into account for tax purposes in the current year |
| amount realized | the sum of any money plus the fair market value of any property received by a seller on the sale or exchange of property |
| installment sale method | a method of accounting for gains realized on the sale of property when some part of the amount realized consists of the buyer’s note, gain recognition is linked to the seller’s receipt of cash over the life of the note. |
| capital gain or loss | gain or loss realized on the sale or exchange of a capital asset. Capital gain may be eligible for a preferential tax rate |
| capital asset | any asset that does not fall into one of eight statutory categories of noncapital assets. Most business assets (accounts receivable, supplies, inventories, tangible personalty, realty, and purchased intangibles) are noncapital assets |
| net capital loss | the excess of current year capital losses over capital gains |
| sections 1231 assets | real or depreciable property used in a trade or business (including rental real estate) and intangible business assets subject to amortization held by the owner for more than one year |
| recapture | Recharacterization of Section 1231 or capital gain as ordinary income |
| nonrecaptured Section 1231 loss | a net Section 1231 loss recognized in any of the five preceding taxable years that has not caused recharacterization of Section 1231 gain as ordinary income |
| depreciation recapture | recapture computed with reference to depreciation or amortization deductions claimed with respect to property surrendered in a sale or exchange |
| Section 1245 recapture | full recapture of depreciation or amortization allowed for tangible personalty or purchased intangibles |
| Section 1250 recapture | recapture of excess accelerated depreciation over straight-line depreciation allowed for buildings placed in service before 1987 |
| 20% recapture | Twenty percent of the excess of Section 1245 recapture over Section 1250 recapture for buildings owned by corporations |
| abandonment loss | the unrecovered basis in an abandoned asset. Abandonment losses with respect to business assets are ordinary deductions. |
| affiliated corporation | for purposes of the tax rules governing worthless securities, any 80 percent or more controlled domestic subsidiary that has always derived more than 90 percent of annual gross receipts from the conduct of an active business |
| recourse debt | a debt for which the debtor is personally liable |
| nonrecourse debt | a debt secured by specific collateral for which the debtor is not personally liable. |
Created by:
ryanriggs18
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