Tax reform provisions have frequently changed the tax on profits realized from the disposition of real estate. This has forced investors to seek escape hatches from fluctuating capital gains taxes. Tax-deferred exchanges permit the disposition of property often with the taxpayer receiving significant cash but without the payment of any tax. Functionally, an exchange is a bridge over the normally taxable event of moving from one property to another. This course alerts the practitioner to the different planning opportunities that surround exchanging and identifies the tax consequences of home sales, foreclosure, repossession, and other real property dispositions. Additional topics of interest include involuntary conversions and at-risk limits. ASSIGNMENT
At the start of the materials, participants should identify the following topics for study:
* Capital gains
* Home sales
* Installment method
* Contingent payments or price
* Section 1031 like-kind exchanges
* Delayed exchange regulations
* Actual & constructive receipt rule
* Foreclosure
* Repossession
* Condemnations
Learning Objectives
After reading the materials, participants will be able to:
1. Identify capital gains rates with applicable assets using the “basket” approach, cite the requirements of the home sale exclusion, and determine gain under the installment method recognizing the application of the unstated interest rules.
2. Specify the types of property that qualify for a like-kind exchange and recognize the methods of identifying such property in a delayed exchange including the mechanics for such an exchange.
3. Recognize the differences between recourse and nonrecourse indebtedness identifying their impact on foreclosures, determine how various types of property affect the repossession rules of 1038 including basis and gain or loss for both installment and non-installment method sales.
4. Determine how easements affect condemnations and how to report gain or loss associated with involuntary conversions, cite the types of payments included in a condemnation award, and specify the types of entities that qualify for exclusion from at-risk limits recognizing the impact of recourse and nonrecourse financing.
