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Carryover Basis
Carryover basis occurs when a property transfer also results in a transfer of the transferor's basis in the property. The transferor's basis in the property "carries over" to the transferee. Tax law of United States of America Carryover basis, also referred to as a ''transferred basis'', applies to inter vivos gifts and transfers in trust. Generally, a taxpayer's basis in property is the cost to acquire the property. However, there is an exception for inter vivos gifts and transfers in trust. For gifts, to calculate a gain, the donee has the same basis in the property as the donor's adjusted basis in the property. The same rule applies for calculating a loss, unless the donor's adjusted basis is greater than the fair market value of the property at the time of the gift. In this case, the loss does not carry over and the basis is the fair market value of the property at the time of the gift. Example In 1998, Mother purchased a lamp for $20. In 2000, Mother gifted the lamp to ... [...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] |
Inter Vivos
Inter vivos (Latin, ''between the living'') is a legal term referring to a transfer or gift made during one's lifetime, as opposed to a testamentary transfer that takes effect on the death of the giver. The term is often used to describe a trust established during one's lifetime, i.e., an inter vivos trust as opposed to a testamentary trust that is established on one's death, usually as part of a will. An inter vivos trust, by definition, includes both revocable and irrevocable trusts. Other meaning The term ''inter vivos'' is also used to describe living organ donation Organ donation is the process when a person allows an organ of their own to be removed and transplanted to another person, legally, either by consent while the donor is alive or dead with the assent of the next of kin. Donation may be for re ..., in which one patient donates an organ to another while both are alive. Generally, the organs transplanted are either non-vital organs such as corneas or redunda ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Trust Law
A trust is a legal relationship in which the holder of a right gives it to another person or entity who must keep and use it solely for another's benefit. In the Anglo-American common law, the party who entrusts the right is known as the "settlor", the party to whom the right is entrusted is known as the "trustee", the party for whose benefit the property is entrusted is known as the " beneficiary", and the entrusted property itself is known as the "corpus" or "trust property". A ''testamentary trust'' is created by a will and arises after the death of the settlor. An ''inter vivos trust'' is created during the settlor's lifetime by a trust instrument. A trust may be revocable or irrevocable; an irrevocable trust can be "broken" (revoked) only by a judicial proceeding. The trustee is the legal owner of the property in trust, as fiduciary for the beneficiary or beneficiaries who is/are the equitable owner(s) of the trust property. Trustees thus have a fiduciary duty to manage th ... [...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 27 ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Fair Market Value
The fair market value of property is the price at which it would change hands between a willing and informed buyer and seller. The term is used throughout the Internal Revenue Code, as well as in bankruptcy laws, in many state laws, and by several regulatory bodies. In litigation in many jurisdictions in the United States the fair market value is determined at a hearing. In certain jurisdictions, the courts are required to hold fair market hearings, even if the borrowers or the loans guarantors waived their rights to such a hearing in the loan documents. Definition United States The fair market value is the price at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts. ''United States v. Cartwright'', 411 U. S. 546, 93 S. Ct. 1713, 1716-17, 36 L. Ed. 2d 528, 73-1 U.S. Tax Cas. ( CCH) ¶ 12,926 (1973) (quoting from U.S. Treasury regulations relat ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Tax Law
Tax law or revenue law is an area of legal study in which public or sanctioned authorities, such as federal, state and municipal governments (as in the case of the US) use a body of rules and procedures (laws) to assess and collect taxes in a legal context. The rates and merits of the various taxes, imposed by the authorities, are attained via the political process inherent in these bodies of power, and not directly attributable to the actual domain of tax law itself. Tax law is part of public law. It covers the application of existing tax laws on individuals, entities and corporations, in areas where tax revenue is derived or levied, e.g. income tax, estate tax, business tax, employment/payroll tax, property tax, gift tax and exports/imports tax. There have been some arguments that consumer law is a better way to engage in large-scale redistribution than tax law because it does not necessitate legislation and can be more efficient, given the complexities of tax law. Major iss ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Partnership Taxation (USA)
The rules governing partnership taxation, for purposes of the U.S. Federal income tax, are codified according to Subchapter K of Chapter 1 of the U.S. Internal Revenue Code (Title 26 of the United States Code). Partnerships are "flow-through" entities. Flow-through taxation means that the entity does not pay taxes on its income. Instead, the owners of the entity pay tax on their "distributive share" of the entity's taxable income, even if no funds are distributed by the partnership to the owners. Federal tax law permits the owners of the entity to agree how the income of the entity will be allocated among them, but requires that this allocation reflect the economic reality of their business arrangement, as tested under complicated rules. Background While Subchapter K is a relatively small area of the Internal Revenue Code, it is as comprehensive as any other area of business taxation. The recent emphasis by the Internal Revenue Service (IRS) to stop abusive tax shelters has broug ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Corporate Tax In The United States
Corporate tax is imposed in the United States at the federal, most state, and some local levels on the income of entities treated for tax purposes as corporations. Since January 1, 2018, the nominal federal corporate tax rate in the United States of America is a flat 21% following the passage of the Tax Cuts and Jobs Act of 2017. State and local taxes and rules vary by jurisdiction, though many are based on federal concepts and definitions. Taxable income may differ from book income both as to timing of income and tax deductions and as to what is taxable. The corporate Alternative Minimum Tax was also eliminated by the 2017 reform, but some states have alternative taxes. Like individuals, corporations must file tax returns every year. They must make quarterly estimated tax payments. Groups of corporations controlled by the same owners may file a consolidated return. Some corporate transactions are not taxable. These include most formations and some types of mergers, acquisitions, ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Tax Accounting
U.S. tax accounting refers to accounting for tax purposes in the United States. Unlike most countries, the United States has a comprehensive set of accounting principles for tax purposes, prescribed by tax law, which are separate and distinct from Generally Accepted Accounting Principles. Basic rules The Internal Revenue Code governs the application of tax accounting.Section 446sets the basic rules for tax accounting. Tax accounting undeemphasizes consistency for a tax accounting method with references to the applied financial accounting to determine the proper method. The taxpayer must choose a tax accounting method using the taxpayer's financial accounting method as a reference point. Types of tax accounting methods Proper accounting methods are described iwhich permits cash, accrual, and other methods approved by the Internal Revenue Service (IRS) including combinations. After choosing a tax accounting method, undesection 446(b)the IRS has wide discretion to re-compute th ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
