Question

1.In what ways can a capital asset be acquired and how is the holding period determined...

1.In what ways can a capital asset be acquired and how is the holding period determined for each method of acquisition?
2. What is a 1231 $ asset? How are gains and losses from the sale of 1231 $ assets treated? On what tax form are gains and losses from the sale of $ 1231 assets reported?
3. What is a capital gain distribution and how is it taxed?

Homework Answers

Answer #1

2.)what is 1231 asset

1231 property is depreciable property used in business and held for MORE THAN  1 year -OTHER THAN STOCK.

TREATMENT OG GAIN AND LOSSES FROM SALE OF 1231 ASSET

losses are fully deductible against all types of income.

gain from  assets is taxed as a short-term capital gain.

1231 ASSET losses are treated as capital losses with the deductibility subject to restrictions.(MEANS RESTRICTION ARE SAME AS SHORT TERM LOSS).

FORM 4797 IS THE FORM ON WHICH SALE OF 1231 ASSET IS REPORTED

3)WHAT IS CAPITAL GAIN DISTRIBUTION

A capital gains distribution is the investor's share of the proceeds of a fund's sale of stocks and other assets. The investor must pay capital gains taxes on distributions, whether they are taken as cash or reinvested in the fund.

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