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Topic: I am going to kill you, REG!!!!! (

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gjtseng
Contributor

Joined: 26 Jan 2012
Online Status: Offline
Posts: 51

Posted: 01 Feb 2012 at 05:24 \| IP Logged

hi everyone

can anyone tell me the difference b/t personal loss and capital loss? If i have a equitment and i sold it at a loss, is that a capital loss or personal loss?

ThX

CPA#1
Major Contributor

Joined: 01 Dec 2009
Online Status: Offline
Posts: 439

Posted: 01 Feb 2012 at 09:50 \| IP Logged

What exactly do you mean? If the equipment is for personal use, it's a capital asset. So, if it's sold at a loss, it's a Capital loss. If the equipment is used for a trade or business and sold at a loss, it's a Section 1231 Ordinary Loss.

__________________
FAR: 52,66,73,61,89
AUD: 47,87
BEC: 80
REG: 64,74,84

DONE!!!!!!!

gjtseng
Contributor

Joined: 26 Jan 2012
Online Status: Offline
Posts: 51

Posted: 01 Feb 2012 at 10:10 \| IP Logged

beause i have encountered a question and the question said " XX has a persoanl used furniture purchsed for $10,000 4 years ago. And now is sold for $7,500."

the answer said that the loss is 2,500 and also said this is a personal loss, so it is not deductible. Here is my question, the furniture is a personal property and also for personal use. Why can't i call it capital loss instead of personal loss? On the other hand, 100 shares of stock are purchased and sold at a loss, then we can call that a capital loss. why not furniture? Maybe this question is silly, but i am very confused!!! Please help me.BTW i am using becker review.

Thx

james

CPA#1
Major Contributor

Joined: 01 Dec 2009
Online Status: Offline
Posts: 439

Posted: 01 Feb 2012 at 10:54 \| IP Logged

Good question. I checked the IRS website to verify.

http://www.irs.gov/taxtopics/tc409.html

"Losses from the sale of personal-use property, such as your home or car, are not deductible."

From what I'm reading, it looks like it can still be called a Capital Loss, but it's just not deductible because it's for personal-use. And I think that's what Becker's explanation was getting at.

Someone please correct me if I'm wrong. I'm still not very good at this despite the months and months of studying I've been doing.

__________________
FAR: 52,66,73,61,89
AUD: 47,87
BEC: 80
REG: 64,74,84

DONE!!!!!!!

gjtseng
Contributor

Joined: 26 Jan 2012
Online Status: Offline
Posts: 51

Posted: 01 Feb 2012 at 11:16 \| IP Logged

Hey~CPA1

Thank you so much for your help!!! Now i got it. This whole exam is killing me....i just took FARE and AUD two weeks ago, but i think i fail the FARE. Can you give me some advise or tips on how you prepare for FAR and Reg? Especially now i am studying for the Reg and i found that some areas are pretty confusing. This is my e-mail: sleepgj@hotmail.com If you dunt mind.

thx

james

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