Capital Gains Tax Essay

Capital gain or loss that happens to a dwelling that is a taxpayer’s main residence is

Why? The owners capitalized and amortized 50 percent of the purchase price ($12 million) simply because the tax rules allowed it; therefore the

According to Jones (2008), protected tenants within the regional authority increased reduction in right to buy their homes by means of the Housing Act 1980. Previous to this act, regional authorities sell their homes along with governmental permission in 1936. Chaney (2000) mentioned that about 7,000 houses were sold in UK in 1970, which were exceeded to approximately 46,000 within 2 years. Stephens (2012) demonstrated that right to buy housing policy offers

* Corporations incur taxes at the corporate level at marginal rates; while, distributions to shareholders are taxed at dividend rate

As seen in Chapter 15 of Real Estate Principles by Charles J. Jacobus, property tax is a large source of income for local governments. When property taxes are not paid, a lien is placed on the property. If property taxes are not paid, this gives the government the right to seize the property. This is currently happening to Bill Davies, a developer from Chicago, Illinois.

The federal and state governments provide the American citizens with all of the basic necessities within our communities and society that is taken for granted. Programs responsible for assistance in times of need, providing a quality standard of living, and maintaining the strongest military in the world costs incomprehensible amounts of money and could never exist without taxes from the American people. Taxes are payments made by individuals and businesses to support the government and its services. The constitution grants that congress “shall have the power to lay and collect taxes, duties, imposts, and excises and to pay the debts and provide for the common defense and general welfare of the people”. Taxes paid by Americans redistribute

Adrian is a salesperson who represents several wholesale companies. On January 2, 2008, she received by mail a commission check from Ace Distributors in the amount of $10,000 that was dated December 31, 2007. Adrian is concerned about the year in which the amount of $10,000 is taxable. Although the check is dated 2007, she contends that it would have been unreasonable for her to drive 100 miles (one way) to the Ace offices on the eve of a holiday to collect her check. Further, Adrian maintains that even if she had made the trip to collect the check, by the time she returned home, the bank would have closed and she could not have deposited the check until January.

In 2013 Marianne sold land, building and equipment with a combined basis of $150,000 to an unrelated third party and in return received an installment note of $80,000 per year for five years. Of the $250,000 gain on sale, $150,000 was classified as Section 1245 gain and the remaining $100,000 was Section 1231 gain. In 2013, Marianne had a capital loss carryover of $60,000, $50,000 of which she used to offset her Section 1231 gain; she recognized no Section 1245 gain. The following year she recognized $40,000 of 1245 gain and $10,000 of Section 1231 gain which she promptly offset with the last $10,000 of the capital loss carryover. In 2015, she recognized $50,000 Section 1245 gain and no Section 1231 gain.

Parent Corporation owns 85% of the common stock and 100% of the preferred stock of Subsidiary Corporation. The common stock and preferred stock have adjusted bases of $500,000 and $200,000, respectively, to Parent. Subsidiary adopts a plan of liquidation on July 3 of the current year, when its assets have a $1 million FMV. Liabilities on that date amount to $850,000. On November 9, Subsidiary pays off its creditors and distributes $150,000 to Parent with respect to its preferred stock. No cash remain to be aid to Parent with respect to the remaining $50,000 of its liquidation preference for the preferred stock, or with respect to any common stock. In each of Subsidiary’s tax years, less than %10 of its gross

period. Capital gains on assets held for more than a year receive preferential rates while capital gains on assets held for

[LO 1] {Research} Are there circumstances in which preferentially taxed income (long-term capital gains and qualified dividends) is taxed at the same rate as ordinary income? Explain.

The $44,000 profit from the sale of the rental house is a taxable gain because it was not the family’s main residence.

1. SpannerWorks Limited is a closely held private company incorporated on 1 April 2001. Its share capital comprises $40,000 $1 ordinary shares fully paid and 10,000 15% preference shares fully paid to $1.00. SpannerWorks Limited has provided you with a list of the following tax transactions it has entered into. The opening balance of the ICA account as at 31 March 2011 was $1,500.

The IRS addresses the topic of capital assets in Section 1221 (Legal Information Institute). Within this section, rather than defining what qualifies as a capital asset, The Code lists items that are not capital assets. This backwards approach has led to a grey area in regards to what classifies as a capital assets. As a result, many court cases have been on this topic. Once it is determined whether an asset is “capital in nature”, the various tax treatments can be considered. Specifically, capital assets sold at a gain that are held for less than one year at the time of sale will be classified as a short term gain (Investopedia, 2015). Short term capital gains can be used to offset short term capital losses for both individuals and corporations, however any excess short term capital gains will be taxed at the taxpayer’s regular tax rate. In addition, long-term capital gains experienced by a corporation are not subject to the more favorable capital gains rate. Also, when

Buying a property in Spain can be very quick indeed, if you have found the Spanish property that you want and you have agreed upon the terms with the seller. It is possible (and frequently done by the Spanish, when no mortgage is involved) to see a Spanish property, pay a small initial deposit then go to the Notary to complete the Escritura (deeds) within a couple of days. The property will then be yours and you will be able to take possession. However, in practise, this is not a good way of proceeding for a foreigner buying property in Spain for the first time. It is better to operate on a slower 'escalator' of risk and commitment that allows you to operate a measured purchase process that carefully ensures that the property you want is