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Investor Gains and Losses (201)
Author: Holmes F. Crouch
Pages: 224
List Price: $19.95
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  • Summary

    INVESTOR GAINS & LOSSES (T/G 201) covers the tax attributes of an "investor" who successfully qualifies for preferential (lower) rates when net (long-term) capital gain is derived, the recovery of capital costs, and how to match exactly the gross proceeds of each transaction electronically reported to the IRS by brokers and others. Also covered:

    • The 36 capital gain tax steps
    • Schedule D (1040) & continuation sheets
    • Unrecaptured Section 1250 gain
    • The 10 "associated" gain/loss schedules
    • Impact of alternative minimum tax
    • The 14 capital loss carryover steps

    Table of Contents
    Investor Gains & Losses
    Book: 201
    
    Table of Content
    
    1.  NEW CAPITAL GAINS RATES                     1-1
    
        The “Old Law” Deduction                     1-2
        Reasons for New Rate Changes                1-3
        Overview of New Law                         1-4
        Key Definitional Terms                      1-6
        When the 10% Rate                           1-8
        When the 20% Rate                           1-10
        When the 25% Rate                           1-10
        When the 28% Rate                           1-13
        Qualified 5-Year Gain                       1-14
        Where Gain Reduction Required               1-15
        Treatment of Installment Sales              1-16
    
    2.  HOW “INVESTOR” TAX DEFINED                  2-1
    
        Capital Asset Defined                       2-2
        Passivity: The Main Key                     2-4
        No Social Security Tax                      2-6
        “Trade or Business” Explained               2-7
        Borderline Examples                         2-8
        Managing Own Investments?                   2-11
        Treatment of Investment Expenses            2-13
    
    3.  MATCHING BROKER RETURNS                     3-1
    
        Birth of TEFRA Concept                      3-2
        Code Section 6045                           3-4
        Backup Withholding: 31%                     3-5
        Taxing Gross Proceeds                       3-6
        Broker Form 1099-B                          3-7
        Search for “Substitute Statements”          3-10
        How “Computer Matching” Works               3-11
        Misperception by the IRS                    3-13
        Role of “Straw Sales”                       3-15
        Nominee Reportings                          3-17
    
    4.  SCHEDULE D (1040) OVERVIEW                  4-1
    
        How Formatted & Why                         4-2
        Five Parts, Actually                        4-4
        Other Differences: I & II                   4-5
        The Columnar Headings                       4-6
        Use of Continuation Sheets                  4-9
        Eyeing the Bull’s Eyes                      4-11
        Line Numberings Continued                   4-12
        Part II: Not “Self-Netting”                 4-13
        Part III: If a Gain                         4-16
    
    5.  COST OR OTHER BASIS                         5-1
    
        Column (e):  The Focus                      5-2
        Must “Capitalize” Costs, Etc.               5-4
        Cost Basis in Stock Shares                  5-7
        The “Specific Identification” Method        5-8
        The “First-In, First-Out” Method            5-10
        The “Average Cost” Method                   5-12
        The “Cumulative Cost” Method                5-13
        The Confusion Caldron: Dividends, Etc.      5-16
        Employee Stock Options                      5-18
        Basis Upon Exchange                         5-19
        Basis Upon Gift                             5-20
        Basis Upon Inheritance                      5-22
        Substituted Basis Rules                     5-23
    
    6.  DIRECT ENTRY TRANSACTIONS                   6-1
    
        Corral Your 1099-Bs                         6-2
        Count Sales & Tally Proceeds                6-3
        Identify by Holding Periods                 6-5
        Short-Term & “Extraneous” Sales             6-7
        Example Part I Entries                      6-8
        Where the Action Lies                       6-10
        Role of “Creativity” in Part II             6-12
        Real Life Creative Examples                 6-13
        Summarizing the Parts                       6-15
    
    7.  SPECIAL TREATMENT SALES                     7-1
    
        The Wash Sale Rule                          7-2
        Stock for Stock Exchange                    7-3
        50% Exclusion of Gain: QSBS                 7-5
        Rollover of QSBS Gain                       7-6
        Worthless Securities; Treatment of          7-8
        Related Persons Transactions                7-10
        Certain Foreign Corporations                7-13
        Short Sales: Borrowed Stock                 7-15
        Options to Buy or Sell                      7-18
    
    8.  INDIRECT GAIN/LOSS ENTRIES                  8-1
    
        Mark-to-Market Contracts                    8-2
        Transfer Collection Lines                   8-4
        Form 2119: Sale of Residence                8-5
        Form 2439: Undistributed Capital Gains      8-7
        Form 4684: Casualty Gain or Loss            8-9
        Form 4797: Business Property Sales          8-11
        Form 6252:  Installment Sales               8-13
        Form 8824: Like-Kind Exchanges              8-15
        Hand Notations & Worksheets                 8-17
        
    9.  GAIN/LOSS FROM PASS-THRUS                   9-1
        
        What Section 1(h) Says                      9-2
        What Schedule D Says                        9-4
        Role of Schedules K-1                       9-5
        Partnership Schedule K-1                    9-8
        Section 1231 Gain/Loss                      9-9
        S Corporation K-1                           9-10
        Differences in Schedule Ds                  9-12
        Estates and Trusts                          9-13
        Capital Gain Distributions                  9-15
        Transfers to Foreign Entities               9-17
    
    10. CAPITAL LOSS TREATMENT                      10-1
    
        “The Law” on Point                          10-2
        If More Than $3,000 Loss                    10-4
        If “Negative” Taxable Income                10-5
        Capital Loss Carryovers                     10-6
        Worksheet Rule of Thumb                     10-7
        Carryback of Certain Losses                 10-9
        Section 1231 Loss Conversion                10-11
        Section 1244 Stock Losses                   10-13
        Bad Debt: Business v. Nonbusiness           10-15
        Undercapitalization Losses                  10-17
    
    11. MAXIMUM RATE COMPUTATIONS                   11-1
    
        Estimating Potential Savings                11-2
        A Schematic Overview                        11-3
        Initial Stripping Process                   11-6
        Modified Taxable Income                     11-8
        Reference Base Tax                          11-9
        Basketing Made Easy                         11-11
        Adding and Comparing                        11-12
        Playing a Little Trick                      11-15
        
    12. ALTERNATIVE MINIMUM TAX                     12-1
    
        Two Flat-Tax Rates                          12-2
        Components of AMTI                          12-4
        Conflict With Capital Gain Rates            12-5
        Form 6251: Old vs. New                      12-6
        Using Part IV, Form 6251                    12-8
        Your Base ATI Tax                           12-9
        Verifying Necessity of Part IV              12-12
        Applying Capital Gain Rates                 12-14
        Adding and Comparing                        12-15 

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