Under §1221(a)(1), property held by a taxpayer primarily for sale to customers in the ordinary course of a trade or business is excluded from the definition of a capital asset. Accordingly, if you by acreage to subdivide, develop and sell, the transaction would not meet the definition of a capital asset...
IRS Form 8949, Sales and Other Dispositions of Capital Assets must be used to report most capital gains and losses. Any properties you own for investment purposes and most properties you own for personal purposes (ie your house) are for the most part considered capital assets....
The US Tax Court case of David A. Gates, et ux. v. Commissioner 135 serves as best I can tell as precedent. Under §121, if married taxpayers own and use property as their principal residence for at least two of the five years ending on the date of sale, they can...
Generally you are eligible to exclude the gain from income if you have owned and used your home as your main home for two years out of the five years prior to the date of its sale. If you have a gain from the...
A foreclosure on rental property technically involves the sale of the property back to the lender. Form 1099-A Acquisition or Abandonment of Secured Property reports that the lender has repossessed or foreclosed on the property. Box 2 is the amount of the outstanding mortgage debt, and box 4 is the fair...
According to Tax Court Memo 2010-261, a husband and wife purchased real estate, refurbished it and reported the sale on Form 4797. They contended the homes were purchased for use as rentals; however, over the three-year period at issue, none of the homes were rented. The IRS determined that...
I've been getting quite a few calls lately from taxpayers that have received 'settlement' money and are confused over the prospective tax ramifications of receiving such money. The Internal Revenue Service recognizes that receiving a settlement award (amount) from a personal injury suit may...
Also commonly referred to as 197 Intangibles, the following costs must be amortized (deducted as an expense) over 15 years (180 months) starting with the later of (a) the month the intangibles were acquired or (b) the month the trade or business or activity engaged...
From a tax perspective the fundamental issue is whether a legitimate business purpose exists for the formation of a distinct entity to do a sale leaseback. If one exists and this is pursued all elements of the transaction should meet an arms length standard and...
According to the National Association of Tax Preparers the key to reporting transactions that involve land easements is to first determine whether the payment represents rental income or sale proceeds. If the taxpayer was leasing a land easement for a specific period of time to...