Professional Documents
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c. Use calendar months (e.g., if held from January 4 to January 4 it is held exactly one year)
d. If stock or securities which are traded on an established securities market (or other property
regu-
larly traded on an established market) are sold, any resulting gain or loss is recognized on the date
the trade is executed (transaction date) by both cash and accrual taxpayers.
e. The holding period of property received in a nontaxable exchange (e.g., like-kind exchange,
invol-
untary conversion) includes the holding period of the property exchanged, if the property that was
exchanged was a capital asset or Sec. 1231 asset.
d. If the basis of property to a prior owner carries over to the present owner (e.g., gift), the
holding
period of the prior owner "tacks on" to the present owner's holding period.
e. If using the lower FMV on date of gift to determine loss, then holding period begins when the
gift
is received.
EXAMPLE: X purchased property on July 14, 2008,for $10,000. X made a gift of the property to Z oh June 10,
2009, when its FMV was $8,000. Since Z's basis for gain is $10,000, Z's holding period for a disposition at a gain
extends back to July 14,2008. Since Z's $8,000 basis for loss is determined by reference to FMV at June 10,2009,
Z's holding period for a disposition at a loss begins on June 11.
h. Property acquired from a decedent is always given long-term treatment, regardless of how long
the
property was held by the decedent or beneficiary, and is treated as property held more than twelve
months.
(2) Capital gain from the sale of collectibles held more than twelve months (e.g., antiques, metals,
gems, stamps, coins) is taxed at a maximum rate of 28%.
,(3) Capital gain attributable to unrecaptured depreciation on Sec. 1250 property held more than
twelve months is taxed at a maximum rate of 25%.
(4) Capital gain from assets held more than twelve months (other than from collectibles and
unrecaptured depreciation on Sec. 1250 property) is taxed at a rate of 15% (or for tax years
beginning after December 31,2008,0% for individuals in the 10% or 15% tax bracket).
(5) For he date an installment payment
i is received (not the date the asset was sold) determines the capital gains rate that should be
n applied
s
t c. Gains and losses (including carryovers) within each of the rate groups are netted to arrive at a
a net
l gain or loss. A net loss in any rate group is applied to reduce the net gain in the highest rate group
l first (e.g., a net short-term capital loss is applied to reduce any net gain from the 28% group, then
m the 25% group, and finally to reduce gain from the 15% group).
e
EXAMPLE: Kim, who is in the 35% tax bracket, had the following capital gains and losses for calendar-year
n 2008:
t
Net short-term capital loss $( 1,500)
s
28.% group-collectibles net gain 900
a 25% group=unrecaptured Sec. 1250 net gain 2,000
l 15% group-net gain 5.000
e Net capital gain $ 6.400
s In this case, the NSTCL of $1 ,500 first offsets the $900 of collectibles gain, and then offsets $600 of the unrecap-
tured Sec. 1250 gain. As a result of this netting procedure, Kim has $1,400 of un recaptured Sec. 1250 gain that
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5%, and $5,000 of capitaJ gain that will be taxed at a rate of 15%.
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