Capital Assets – Section 1221
Capital assets can be classified into four separate categories for the ease of determining how taxable gains and losses are taxed.
Marketable Investment Assets – Stocks, bonds, mutual funds, land, stamps, coins and gems held for investment purposes.
Tax treatment of sales – Capital gains and capital losses
Gains and Losses can be used to offset each other, and the taxpayer can take an additional $3,000 loss per year ($1,500 if married filing separately).
Business Inventory – Inventory held for sale to customers and accounts or notes receivable.
Tax treatment of sales – Ordinary income and ordinary losses
Section 1231 Property – Depreciable residential rental property or trucks, autos, machinery, fixtures, computers or equipment used in a business.
Tax treatment of sales – Ordinary income or capital gains/ ordinary loss
Personal Items – Personal residence, jewelry, art, cars, furniture, baseball cards, coins, stamps and other collectibles used for personal use.
Tax treatment of sales – Capital gains/losses are non-deductible
Tax on all or part of the sale of the principal residence can be avoided if all requirements are met.
*Holding period rules will determine preferential tax treatment for most long-term assets over short-term held assets.
MarketsSection 1231 property is depreciable business property that’s held for a year or longer.
Personal FinanceRental property ownership has its benefits but when selling you can face a big tax hit. Thankfully there are ways to reduce your capital gains exposure.
Personal FinanceIndividuals in the 25% or higher tax bracket pay a 20% tax on long-term capital gains.
Financial AdvisorAn investment plan that helps clients minimize related tax hits adds even more value to an already well-thought out strategy. Here are some tips.
Personal FinanceLearn about the differences between a use tax and an Internet sales tax. Find out about transactions in which the taxes apply, and to whom they apply.
Personal FinanceThis property market is easy to access and provides profitable opportunities.
Personal FinanceLearn the proper procedure for deducting stock investing losses, and get some tips on how to strategically take losses to lower your income tax bill.
Managing WealthA capital gains tax is imposed on the profits realized when an investor or corporation sells an asset for a higher price than its purchase price.
Personal FinanceLearn about the difference between short- and long-term capital gains and how the duration of your investment can impact your tax liability.
Personal FinanceIf your home or second home is not in the United States, you can still get U.S. tax deductions. How many and what kind depends on whether you also rent it.