bryris
Major Contributor
Joined: 07 Dec 2008
Location: United States
Online Status: Offline
Posts: 624
|
| Posted: 11 Jul 2009 at 17:28 | IP Logged
|
|
|
I am trying to work out the kinks in my understanding of this.
Please correct me where I am wrong below:
Any asset used in a business AND held greater than 1 year is 1231 property. If such property is sold, amounts realized can be netted together. If a gain, is treated as LTCG and if a loss, treated as ORDINARY LOSS.
Within the category of 1231 assets, we can further classify them as either 1245 or 1250 property. 1245 is pretty much anything that is not a building and 1250 prop is a building. Both of these classifications are depreciable. If it is 1245 prop (not a building), then any depreciation is recaptured as ordinary to the extent of the realized gain. If 1250 (building), then any depreciation taken in excess of that which would have occurred using SL is recaptured as ordinary.
Here is where I am really uncertain:
If business property is sold in less than 1 year (bought and sold within the same tax year), it is ordinary gain/loss. If business property is sold after 1 year, it is 1231. In order to be classified as strictly a CG item, it must be held for investment (if a corp, how else would a business sell property and not have it be classified as business use?), or any any asset not used for business in the case of an individual.
For individuals, if there is a LTCG and a 1231 loss, they cannot be netted. The CG is gain (at the favorable rates), while the 1231 loss is ordinary. If there is a LTCL, and a 1231 gain, they can be netted with each other.
For corporations, all 1231/LT G/L can be netted since there are no favorable rates for corps.
__________________
REG - 97
FAR - 97
BEC - 90
AUD - 97
|
Active Topics 
Memberlist 
Search 
Help
Register 
Login
Topic: Property types
Topic Closed)
