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Acquisition of Property Murphy Higgins Concepts in Federal Taxation, 2011 edition

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Acquisition of Property Murphy Higgins Concepts in Federal Taxation, 2011 edition

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    1. © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Chapter 9 Acquisition of Property Murphy & Higgins Concepts in Federal Taxation, 2011 edition

    2. © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Concept Review Capital recovery concept: Property’s basis may be recovered before any taxable income is realized from disposal of property Property is classified by both its use and its type

    3. © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Property Tax definition of property Term property refers to long-lived assets owned by a taxpayer Amount invested in an asset is the property’s basis Use of Property Property is used for Trade or business, Production of income (investment), or Personal purposes The same property may be used differently by different taxpayers

    4. © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Types of Property Personal property (personalty) Has a physical existence Has form, shape and substance Examples: Machinery, equipment, automobiles, trucks, computers, furniture, etc., Real property Land and any structures that are permanently attached to land Examples: Land and land improvements such as landscaping, shrubbery, parking lots, and fences; barns, sheds Has form, shape and substance Intangible property Property that lacks a physical existence Rights to the property exist only on paper Have no form, shape or physical substance Personal use property Used purely for personal purposes Example: Personal residence, clothing, furniture, home computer, lawnmower, personal automobile

    5. © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

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