Outline TAX - Will help you on the final exam for sure. PDF

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Will help you on the final exam for sure....

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Owner buys land for 10k, sells 16k. And payed 2k fmv to clear land before selling it then adjusted basis is 12k. Subtract amount realized of 16k from adjusted basis to get 4k If owner cleared it no additional 2k to add to adjusted biasis. Employee Fringe benefits example. If the owner worked for a dumb company, who cleared the land at a discount for 1,000. 1) requires same line of business RECIPROCAL 2) requires non discrimintaion rule 3) goods vs service? 20% vs GPP it’s a service so 20% the remaining 30 percent that he received Is taxable as gross incone. *Loans are not gross income if you are expected to pay them back. What if owner works for same land clearing company who sold him a 2k machine for 1k (who has a profit margin of 15%). Since it is a good it is GPP- profit over sales, 15% only allowed 15% profit. 35% that is not excluded from gross income. Dull and sharp will be on exam. Here it is sharp- land cost basis of 6k, value of 9k Dull- stock with basis of 8k, value of 10k 1001 forumla is ar- ab = G/L R Ar he got stock worth 10k AB is from before the transaction. 6k. AR 10k- AB 6k= 4k gain realized AB for new property? 10k The BASIS OF PROPERTY RECEIVED IN A TAXABLE EXCHANGE IS THE FMV OF THE PROPERTY RECIEVED IN EXCHANGE. Dull got stock basis of 8k, value of 10k Ar 9k –ab 8k = 1k gain realized Got something worth 9k in value so ar duck thts what momma said we were eating there for lunch RUle IN ARM LENGTH EXCHANGE WHERE YOU DO NOT KNOW FMV, YOU ARE GOING TO ASSUME THAT IT IS AT LEAST WORTH THE FMV OF WHAT YOU ARE GIVING UP, AR IS GOING TO BE FMV OF WHAT YOU GAVE UP FOR SUBSQUENT SALES 102 GIFTS GENEROUSITY AND DETTACHED AND DISINTERESTD 1015 INTER VIVOS they are alliiivveeee. BASIS SAME AS IT WOULD BE IN THE HANDS OF THE DONOR, UNLESS DEPRECIATION AT TIME OF TRANSFER, FMV. SECOND RULE FROM 1015 CARRY OVER BASIS DONEE AB = DONOR AM

1014 basis of property acquired from a decedent – testamentary 1016 IF SOMEONE GETS PROPERTY WITH AB FOR 100 AND THEN ADDS 50 TO IT AND GIVES IT TO SOMEONE ELSE THE CAPITAL EXPENDITURE ADDS 50 SO NEW AB IS 150 1015 Depreciation- reuction in the value of an asset with passage of time, due in particular to wear and tear Rule 2 if “loss basis rule” If fmv is greater than the donor’s ab …... then you can’t know the actual AB until the item is sold By definition, the FMV IS LESS THAN THE DONORS AB FMV NO G/L DR AB CAROL BUYS A TV for 125. She gives tv to debra, when the tv is only worth 100. FMV NO G/L DR AB What If Debra sells it for 80. Or 120 or 140. Fmv is 80 that is adjusted basis you use. 120 no gain or lose then her adjusted basis is 120. If she sells it for 140 then donor’s adjusted basis applies and it goes down to 125. 61a1 gross income compensation for services 61a3 gains derived from property 61a4 interest -mine -163

Gross income -

63 deductions

AGI- adjusted gross income -

-standard/itemized deductions

Taxable income X tax rate Tax liability -credits

+ additional taxes Final tax liability 102 gross income is not gift, bequest, devise, or inheritance Employee gifts are always taxable 102 Employeers can get a tax deductions but only for gifts that are to non employees DEATH TAX 414 highly compensated employees (add to this.)...