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Nonrecognition Provisions
According to section 1001(c) of the Internal Revenue Code (), all realized gains and losses must be recognized "except as otherwise provided in this subtitle." While the general rule of recognition applies in most cases, there are actually several exceptions located throughout the Internal Revenue Code. These exceptions are commonly referred to as nonrecognition provisions. Common themes Nonrecognition provision generally have two common themes. First, nonrecognition is conferred because it is said that the sale or exchange at issue usually involves a mere change in the ''form'' of an investment and not a change in the ''substance'' of that investment. Second, the realized gain or loss usually never disappears: the unrecognized gain or loss typically carries into the new asset. When the new asset is sold or exchanged in a taxable transaction, the realized gain or loss from the first transaction will then be recognized. Preservation of the unrecognized gain or loss is accompl ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Internal Revenue Code
The Internal Revenue Code (IRC), formally the Internal Revenue Code of 1986, is the domestic portion of federal statutory tax law in the United States, published in various volumes of the United States Statutes at Large, and separately as Title 26 of the United States Code (USC). It is organized topically, into subtitles and sections, covering income tax in the United States, payroll taxes, estate taxes, gift taxes, and excise taxes; as well as procedure and administration. The Code's implementing federal agency is the Internal Revenue Service. Origins of tax codes in the United States Prior to 1874, U.S. statutes (whether in tax law or other subjects) were not codified. That is, the acts of Congress were not separately organized and published in separate volumes based on the subject matter (such as taxation, bankruptcy, etc.). Codifications of statutes, including tax statutes, undertaken in 1873 resulted in the Revised Statutes of the United States, approved June 22, 1874, ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Recognition (tax)
In U.S. Federal income tax law, recognition is among a series of prerequisites to the manifestation of gains and losses used to determine tax liability. First, in the series for manifesting gain and loss, a taxpayer must " realize" gain and loss. This word "realize" is a term of art that refers to the realization requirement where the taxpayer must receive or lose something of monetary value. Once the realization requirement is met, gains and losses are taken into account only to the extent that they are also "recognized." Internal Revenue Code section 1001(c) provides that gains and losses, if realized, are also recognized unless otherwise provided in the Code. This default rule has several exceptions, called "nonrecognition" rules, which are scattered throughout the Code. These exceptions often apply in situations in which a taxpayer shifts his investment from one piece of property to another piece of property. In such cases, where the taxpayer is merely continuing his investment, ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Investment
Investment is the dedication of money to purchase of an asset to attain an increase in value over a period of time. Investment requires a sacrifice of some present asset, such as time, money, or effort. In finance, the purpose of investing is to generate a return from the invested asset. The return may consist of a gain (profit) or a loss realized from the sale of a property or an investment, unrealized capital appreciation (or depreciation), or investment income such as dividends, interest, or rental income, or a combination of capital gain and income. The return may also include currency gains or losses due to changes in the foreign currency exchange rates. Investors generally expect higher returns from riskier investments. When a low-risk investment is made, the return is also generally low. Similarly, high risk comes with a chance of high losses. Investors, particularly novices, are often advised to diversify their portfolio. Diversification has the statistical eff ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Cost Basis
Basis (or cost basis), as used in United States tax law, is the original cost of property, adjusted for factors such as depreciation. When property is sold, the taxpayer pays/(saves) taxes on a capital gain/(loss) that equals the amount realized on the sale minus the sold property's basis. Cost basis is needed because tax is due based on the gain in value of an asset. For example, if a person buys a rock for $20, and sells the same rock for $20, there is no tax, since there is no profit. If, however, that person buys a rock for $20 and then sells the same rock for $25, then there is a capital gain on the rock of $5, which is thus taxable. The purchase price of $20 is analogous to cost of sales. Typically, capital gains tax is due only when an asset is sold. However the rules for this are very complicated. If tax is paid because the value has increased, the new value will be the cost basis for any future tax. Internal Revenue Service (IRS) Publication 551 contains the IRS's defi ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Adjusted Basis
In tax accounting, adjusted basis is the net cost of an asset after adjusting for various tax-related items. Adjusted Basis or Adjusted Tax Basis refers to the original cost or other basis of property, reduced by depreciation deductions and increased by capital expenditures. Example: Brad buys a lot for $100,000. He then erects a retail facility for $600,000, then depreciates the improvements for tax purposes at the rate of $15,000 per year. After three years his adjusted tax basis is $655,000 100,000 + $600,000 - (3 x $15,000) Adjusted basis is one of two variables in the formula used to compute gains and losses when determining gross income for tax purposes. The Amount Realized – Adjusted Basis tells the amount of Realized Gain (if positive) or Realized Loss (if negative). Statutory definition Section 1012 of the Internal Revenue Code defines “basis” as a taxpayer’s cost in acquiring property, except as provided in Sections 1001-1092. Section 1016 then lists 2 ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Like-kind Exchange
A like-kind exchange under United States tax law, also known as a 1031 exchange, is a transaction or series of transactions that allows for the disposal of an asset and the acquisition of another replacement asset without generating a current tax liability from the sale of the first asset. A like-kind exchange can involve the exchange of one business for another business, one real estate investment property for another real estate investment property, livestock for qualifying livestock, and exchanges of other qualifying assets. Like-kind exchanges have been characterized as tax breaks or "tax loopholes". U.S. Tax Code section 1031 This kind of transaction is also called a "1031 exchange", because Internal Revenue Code section 1031 of the U.S. Internal Revenue Code allows owners of certain kinds of assets to defer capital gains taxes on any exchange of like-kind properties. Both the relinquished property and the acquired property must be like-kind, and must be held for busine ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
