Capital Assets -

Definition & Descriptions

All assets are Captial Assets, except:

A - C - I - D

Accts (notes) receivable

Copyrights

Inventory

Depreciable property

Sale of Residence  -

Capital Gain Exclusion Amounts

Single - $250,000 Exclusion

Married Filing Joint - $500,000 Exclusion

Note:  Must be principal residence for 2 of last 5 years

and

exclusion can only be used once every 2 years.

Capital Asset Transfers Among Related Parties -

Exam Tip

Never gift or sell an asset to a related party

if the owner's basis is more the FMV of the asset.

Loss is not deductible and dual basis rules go into effect.

Corporation Dividend Received Deduction

Ownership %       DRD %

< 20%                70%

20% - < 80%        80 %

80% +                100%

Personal Services Corporation -

Tax Rate

35% Flat Rate

S Corp Requirements

Domestic Corporation

100 Shareholders Maximum

Not owned by nonresident aliens, C corps, partnerships and certain trusts

Only one class of outstanding (voting) stock