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 Topic: I am going to kill you, REG!!!!! ( Topic Closed)
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gjtseng
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Joined: 26 Jan 2012
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Posts: 51
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| Posted: 07 Feb 2012 at 20:46 | IP Logged
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Hey guys
I got two concept question~ For the corporation's capital gain. The becker said that to add to the ordinary income and taxed at the regular tax rate. So we always assum the capital gain as short term gain? Second question, how about Section 1231 gain? They are also capital gain. But are they adding back to the ordinary income and taxed at the regular tax rate?
Thx
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CPA#1
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Joined: 01 Dec 2009
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| Posted: 08 Feb 2012 at 08:59 | IP Logged
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Yes, capital gain can be added to Ordinary Income and is taxed. But for Corporations, Capital Losses do not get deducted against Ordinary Income. You can only deduct Capital Losses against Capital Gain. If your Capital Losses exceed your Capital Gains, you can carry it back 3 years and forward 5 years as Short Term Capital Loss.
However, Individuals can deduct up to $3,000 of Capital Losses against Ordinary Income. The rest, they can carry forward indefinitely.
And no, we do not always assume Capital Gain is Short Term. First, net both the Short Term Capital Gains and Losses. Then, net both the Long Term Capital Gains and Loss. Now, net both the Long Term Capital Gains/Loss with the Short Term Gain/Loss to come up with your Net Capital Gain.
For example, I have the following Capital Gains and Losses....
$5,000 LT Cap Gain
$2,000 LT Cap Loss
$1,000 ST Cap Gain
$2,000 ST Cap Loss
Net the LT Cap Gains & losses (5,000 -2,000) and that will give you $3,000 LT Cap Gain. Net the ST Cap Gains & Losses (1,000-2,000) and that will give you $1,000 ST Cap Loss. Now, net both figures and you will get a $2,000 Net Long Term Capital Gain and that will get added to Ordinary Income and get taxed. It still maintains its Long Term Capital Gain character.
But let's say I have a $5,000 ST Capital Gain and a $7,000 LT Capital Loss. If I net all the amounts, I get a $2,000 Long Term Capital Loss. For Corporations, I will have to carry that back 3 years and forward 5 years as Short Term Capital Loss ONLY. But for Individuals, they will maintain that Long Term Capital Loss character and carry that forward indefinitely.
And yes, Section 1231 gain is Long Term Capital Gain, but a Section 1231 Loss is considered Ordinary Loss.
See how easy REG is! ;)
__________________
FAR: 52,66,73,61,89
AUD: 47,87
BEC: 80
REG: 64,74,84
DONE!!!!!!!
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momcpa
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Joined: 21 May 2010
Location: United States
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Posts: 91
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| Posted: 08 Feb 2012 at 09:40 | IP Logged
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cpa#1
Very nice explanation....It seems like you have already killed Reg.
Good luck
__________________
BEC 81
FAR 75(GOD IS GREAT)
AUD 77
REG 79
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CPA#1
Major Contributor
Joined: 01 Dec 2009
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Posts: 439
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| Posted: 08 Feb 2012 at 09:48 | IP Logged
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momcpa wrote:
cpa#1
Very nice explanation....It seems like you have already killed Reg.
Good luck |
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You have no idea how much additional studying I've been doing, lol. If I don't make it this time, I honestly would not know what to do...
__________________
FAR: 52,66,73,61,89
AUD: 47,87
BEC: 80
REG: 64,74,84
DONE!!!!!!!
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gjtseng
Contributor
Joined: 26 Jan 2012
Online Status: Offline
Posts: 51
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| Posted: 08 Feb 2012 at 09:59 | IP Logged
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Arbor Corp has 9 common stockholders. Arbor Corp derives all of its income from investments in stocks and securities, and regularly distributes 51% of its taxable income as dividends to its shareholders. Arbor is a?
The answer said "personal holding company"
My question is why? the book said at least 50% of shares owned by 5 or fewer shareholders.
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