Flashcards
Book3
Cards in this deck (32)
- 12 Groups of PropertyRealty And Personalty
- 2Those Groups Broken Into These 2 CategoriesTangible & Intangible
- 3RealtyLand, anything permanently affixed or attached to the land, or certain items not easily removed
buildings, sidewalks, parking lots, fences, walls, billboards - 4Personalty"Personal Property"
cars, planes, clothing, equipment, furniture - 52 Ways to Classify Property by Useincome-producing or personal use
- 6Property Used In Businessproperty used to produce income on a continuous basis
ex - jewler's glass case - 7Property held for the production of incomeDoesn't require much of taxpayer's attention, but still used to produce income (maybe rental property on the side)
- 8InventoryProperty held out for resale
no depreciation or cost recovery deductions allowed (jewelry in jewelry store) - 9Importance of distinguishing between types of income-producing propertyMaking a 179 expense election
- 10Personal Use PropertyNOT the same as personalty
property held for taxpayer's own pleasure
i.e. sailboat bought for fun - 11Personal (Nondeductible) ExpensesIncurred for personal reasons (like life ins. prems, resident insurance, rent, bills, etc.)
-never deductible
-exceptions: interest on mortgage, charity, medical expenses, gambling losses - 12Currently Deductible ExpendituresOrdinary & Necessary expenses used for business (IRC section 162 lists them)
- 13Capital ExpenditurePurchase of property or improvements to property that extend beyond one tax year
-not fully deductible that year
-cost recovery over time (unless <$500) - 14Businesses with "acceptible financial statements"they can expense any asset with a cost of $5k or less
- 15"Acceptible Financial Statements"Needs to be filed with SEC
Certified audited
Needs to be provided to the federal or a state gov't or agency - 16Capitalizedthe cost of the expenditure is added to the basis of the property
- 17RepairMaintains an asset in normal working condition
- 18ImprovementMaterially prolongs the life or value of hte asset, or adapts it to new use
- 19"Repairs" may be "Improvements" if...they are performed PRIOR to property being placed in service
- 20General BasisTied to the cost of the asset
- 21Substituted basistied to the basis the donor had in the asset (for a gift)
- 22Stepped-Up BasisUsually equals FMV of asset on date of death (for inheritance)
- 23Acquisition CostsYou have to capitalize (add to basis) certain costs associated with acquisition: sales taxes, freight costs, setup & installation, legal fees, etc.
- 24Gifts (Special Rule)Usually the donor's basis, BUT
if FMV < Donor's Basis, the FMV is used to determine loss and the donor's basis is for determining gain (if in between, no gain or loss) - 25Gift Rule RewordedIF FMV donor's basis is a gain and anything in the middle is nothing.
- 26InheritanceBasis will be FMV on date of death
- 27Adjusted Basisoriginal basis in the property increased by any adjustments like acquisition expenses, improvements and reduced by depreciation deductions
- 28Cost Recovery RulesCan deduct a portion each year through cost recovery (depreciation) deductions
- 29AmortizationCost recovery for INTANGIBLE PROPERTY
- 30Things not subject to depreciationInventory
Securities
Personal-Use Property
Natural Resources
Assets W/O an ascertainable useful life
*these just get capitalized - 313 Basic Method of Depreciation Under MACRS1. Accelerated Depreciation
2. Straight-Line Depreciation
3. Section 179 Expensing - 32MACRSModified Accelerated Cost Recovery System
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- Tax Planning Flashcards on Book3, created by rlsaylor179 on 08/11/2014.
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- rlsaylor179
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