CCH Learning Center

Description:

The purpose of this series of courses is to bring the tax preparer ‘‘up-to-speed'' in the most efficient way possible for the tax preparation season. It offers quick answers and hands-on help for tax return preparation that has become increasingly complex by several recently passed tax Acts.

The fifth course in this series discusses gains and losses: which ones are recognized and which are not. It begins by defining basic terms, such as amount realized, basis, realized gain, and realized loss.'

It then moves on to examining specific situations. It explains the basic requirements for the exclusion of gain on the sale of a principal residence; nonrecognition of gain on involuntary conversions; computation of the basis of property, either that which was sold or exchanged, or property acquired by gift or in some other way.

Finally, the course looks at the distinction between capital and ordinary assets, which is important because capital gains and losses are reported differently from ordinary gains and losses, and the deduction of capital losses is sharply limited.

Upon completing this course, you will be able to:

• Distinguish between taxable and tax-free exchanges
• Report like-kind exchanges on the return
• Identify other types of tax-free exchanges
• Determine the basis of and figure gain or loss on the sale of a principal residence
• Calculate the basis of property acquired by purchase, gift, or inheritance
• Demonstrate how to treat a loss on the sale of a residence
• Define the special rules affecting basis
• Properly defer gain on an involuntary conversion
• Correctly treat severance damages
• Recognize and use the special rules for disaster losses
• Determine the basis of property acquired by gift or inheritance
• Define what a capital asset is
• Explain how capital gains are taxed and the limits on capital losses
• Figure Section 1231 gains and losses