Cheatography
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Corporate Taxation - Chapters 2, 3 & 4 + trade worksheet
This is a draft cheat sheet. It is a work in progress and is not finished yet.
Trades
Definitions |
Basis |
remaining tax cost in an asset |
Realized Gain/Loss |
Total economic gain/loss on a transaction |
Recognized Gain/Loss |
The portion that is taxable (or deductible) NOW |
Deferred Amount |
The portion postponed to a future year |
Proceeds / Amount Realized |
+ Cash received |
(boot) |
+ FMV of new assets received |
(or services) |
+ Liabilities assumed BY the buyer |
(seller no longer owes = economic receipt) |
− Selling costs paid |
(commissions, legal fees) |
Buyer's Basis in Acquired Asset |
+ Cash paid |
+ liabilities assumed by the buyer |
+ FMV of services rendered to seller |
Taxable vs. Deferred
Fully Taxable |
Realized G/L |
FMV of New Asset − Taxpayer's Basis |
Recognized G/L |
Same as Realized |
Basis in New Asset |
FMV of New Asset |
Deferred |
Realized G/L |
FMV of New Asset − Taxpayer's Basis |
Recognized G/L |
$0 (fully deferred) |
Basis in New Asset |
If GAIN: |
NAFMV − Deferred Gain |
If LOSS |
NAFMV + Deferred Loss |
Deferred w/ boot |
Adjust NAFMV for boot |
NAFMV = Trade Value − Boot Received |
Realized G/L |
NAFMV − Taxpayer's Basis |
Recognized G/L |
BOOT RULE |
BOOT RULE: Recognized Gain = LESSER of Realized Gain OR Boot Received |
If loss, REC = 0 |
Deferred Amount |
Realized Gain − Recognized Gain |
Basis in New Asset |
NAFMV +/− Deferred Amount |
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gain = subtract |
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loss = add |
Boot = cash or non-like-kind property received. Boot is ONLY taxable if there is a GAIN. If loss or break-even, recognized = $0 regardless of boot.
Like kind exchange example
§199A
QBI Deduction = LESSER of: |
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(1) 20% × Qualified Business Income (QBI) |
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(2) 20% × Modified Taxable Income (MTI) |
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Modified Taxable Income = Taxable income BEFORE QBI deduction − Net capital gains |
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