Tax Accounting- Multiple Choice

CHAPTER 14

1. Quick Look (should look familiar):

a. Amount Realized (Sales Price)

b. Adjusted Basis (Original Basis and Effects of Additions/Subtractions)

c. Realized Gain/Loss (Math: a-b)

d. Recognized Gain/Loss (Tax Effects?)

2. Closer Look:

a. Amount Realized (e.g., Sales Price):

i. Money plus FMV of property and services received plus liabilities purchaser assumes less selling expenses (e.g., selling commissions, advertising, legal fees)

1. Understand that FMV (which = price a willing buyer and willing seller would reach after bargaining where neither party is acting under compulsion) can be tough to determine, and you may need help determining – e.g.,

a. Comparable sales and transactions

b. Appraisals

b. Adjusted Basis (Effects of Additions/Subtractions)

i. Start with Original Basis (Generally, Original Basis = Cost [which includes cash and other property that was given and debt that was assumed])

ii. Increases for capital additions:

· Generally, costs of improvements with useful life of > 1 year (i.e., not routine repair and maintenance expenses)

iii. Subtractions for capital recoveries – examples:

· Depreciation and cost recovery allowances

· Casualties and thefts (basis is reduced by deductible losses and insurance received)

· Amortizable bond premiums

· Certain corporate distributions (e.g., tax-free dividends on stock)

· Easements

c. Recognition & Non-recognition of Gain/Loss?

i. Generally, gain is realized and recognized if amount realized > adjusted basis

· But, some realized gains are deferred (e.g., gains on certain like-kind exchanges) or tax-free because they may be excluded (e.g., gains on sales of personal residences)

ii. Generally, loss is realized and recognized if amount realized < adjusted basis

· But, some realized losses are deferred (e.g., losses on certain like-kind exchanges) or disallowed (e.g., losses on most personal use property and losses on sales to related TPs)

[See Concept Summary 14.1]

d. Determination of Basis (e.g., for determining G/L and depreciation):

i. Generally, Original Basis = Cost (includes cash and other property and services that were given and debt assumed for the property)

· May also include other amounts such as commissions, legal fees, recording fees, sales/transfer taxes, installation/delivery costs, title insurance, survey costs

ii. Basis IDENTIFICATION – Basis for shares of stock sold (e.g., when TP has purchased several shares at multiple dates/prices) depends on whether the TP can identify the shares (if so, use the amount for those shares; if not, use FIFO)

iii. Basis ALLOCATION-Basis can also get complicated if buying more than one asset:

1. TP will often allocate total basis to individual assets based on their relative FMVs

EXAMPLE: Damian recently purchased a piece of land, a building and a truck for a lump sum of $400,000. The fair market value of the land was $150,000, the fair market value of the building was $300,000, and the fair market value of the truck was $50,000. What is Damian’s basis in the TRUCK?

a. $133,333

b. $50,000

c. $40,000

d. $0

iv. Also, for STOCK DIVIDENDS, treatment depends on whether the stock dividend is taxable (holding period issues will be addressed more later):

· IF nontaxable stock dividends: Basis of original shares is allocated to both the old and new shares (allocate basis using the # of shares, if CS dividend on CS, or allocate using relative FMVs on date of divided distribution, if PS dividend on CS); holding period begins on date of the acquisition of the original stock (not the date of dividend distribution).

· IF taxable stock dividends: Basis of stock received as dividend = FMV at date of dividend distribution; holding period = date of dividend distribution

EXAMPLE: On September 1, 2008, Amy paid $50,000 for 500 shares of WH Inc. common stock. On August 15, 2014, Amy received a taxable 10% convertible preferred stock dividend (i.e., 50 shares). On August 15, 2014, that convertible preferred stock was trading on the market for $75 a share. On November 7, 2014, Amy sold the 50 shares received on August 15, 2014. What is the basis of the 50 shares Amy sold on November 7, 2014?

a. $0

b. $3,750 ($75 x 50)

c. $4,545.45 ($90.91 x 50)

d. $5,000 ($100 x 50)

e. Property Acquired by GIFT:

· Basis for GAIN (and depreciation): Adjusted basis of donor plus the portion of the gift tax paid by donor that is attributable to the net increase in value of the gift - i.e., amount by which FMV exceeds donor’s adjusted basis:

· Unrealized appreciation / Taxable gift amount times gift tax paid (different rules if gift was acquired before 1977)

· Basis for LOSS: LESSER of (1) donor’s adjusted basis (i.e., the gain basis) OR (2) FMV at date of gift – this LESSER basis rule keeps losses smaller

· Holding Period: Tack donor’s unless FMV at date of gift is the basis (if so, use date of gift)

Basically no gain/loss if: Basis for Loss < Selling Price < Basis for Gain

(Understand that this is different than the Amount Realized equaling the Adjusted Basis!)

EXAMPLE. In 2006, Veronica received a gift of stock from Catherine worth $10,000 at the time of the gift. At the time of the gift, Catherine’s adjusted basis was $15,000. What is the gain or loss that Veronica should report for 2014 if she sold the stock to Pablo in 2014 for $12,000 (ignore any gift tax that may have been paid on the transfer from Catherine to Veronica)?

a. There is no gain or loss

b. $12,000 gain

c. $2,000 gain

d. $3,000 loss

f. Property Acquired from DECEDENT:

· General Rule: B = FMV of property at date of decedent’s death

· Potential for a FREE “step up” in basis

· But, could be a “step down” in basis

· Alternative Valuation: Where executor elects for estate tax purposes to value decedent’s gross estate as of 6 months after death (instead of date of death); however, alternative valuation date may only be elected IF the value of the gross estate and the amount of the estate tax liability are lower than they would have been if the date of death was used

· Exception: If appreciated property was acquired by decedent by gift during 1 year period before death and property then is inherited by the original donor (or his/her spouse), then adjusted B = adjusted B in hands of decedent immediately prior to death

· Holding period of property acquired from decedent = long-term (regardless of how long the beneficiary and/or the decedent held it)

g. Disallowed Losses

i. Related Parties : Loss from sale or exchange of property between certain related taxpayers is not deductible (disallowed losses may, however, be used to offset the gain realized by the related TP upon a later sale; but, this use of the previously disallowed loss is only available to the original transferee).

· Examples of related TPs:

a. Members of same immediate family (including brothers/sisters; spouses; ancestors; lineal descendants)

b. Corporation where TP directly or indirectly owns > 50% of the outstanding stock

ii. Wash Sales. Basically, occurs when substantially identical stock is bought within 30 days before or after a sale. Reason for this?

· No deduction given for LOSSES (i.e., this rule does NOT apply to gains)

· Also, the disallowed loss is NOT lost forever – it is added to the basis of the newly acquired stock (thus, the basis in the newly acquired stock will be purposefully set at an artificially high amount to include the temporarily disallowed loss)

h. Personal Use Conversion. When personal use property is converted to business/income-producing use,

i. Basis for LOSS (and depreciation) on such assets is lesser of (1) FMV of property at time of conversion or (2) AB on date of conversion

ii. Basis for GAIN is AB on date of conversion

CHAPTER 15

1. Introduction

a. We previously covered realized gains and losses:

i. Amount of realized gain/loss is calculated by comparing FMV property received v. adjusted tax basis of property given up (i.e., realized is based on MATH)

ii. Realized gain/loss is recognized unless there is a provision for nonrecognition

b. Nonrecognition:

i. Nontaxable deferrals (e.g., 1031 exchange) (adjustment to basis; TEMPORARY)

ii. Tax-free exclusions (e.g., sale of personal residence) (PERMANENT)

2. Like-Kind Exchanges (Section 1031) : properties held for productive use in a T or B or for investment (NOT inventory, stocks, property held for personal use) may trigger a MANDATORY nonrecognition of G/L

a. WHY not tax?

b. Property is like-kind if same nature or character (do NOT look to grade or quality):

i. Generally, real property for real property

ii. For personal property, same general “asset class” – examples include:

· Office furniture, fixtures, and equipment

· Info systems (e.g., computers/peripheral equipment)

· Autos

· Light general purpose trucks

· Heavy general purpose trucks

c. Also, some three-party exchanges can effect a tax-free exchange for a party where cash is obtained by one of the other parties (but, TP seeking nonrecognition must, among other things, NOT receive or control the $ and TP must satisfy both a 45 day “identification” deadline and a 180 day [or perhaps shorter] “acquisition” deadline)

d. Mandatory nonrecognition may create unintended consequences

e. Exchanges NOT solely in-kind:

i. Realized gain will be recognized to extent of cash or other non-like property received by the transferor (includes liabilities/debt assumed by the transferee)

ii. Loss on like-kind exchange for the like property given is NOT deductible – exchange just gives the new/acquired like property a higher basis (even if that BASIS exceeds the FMV of the property)

iii. However, loss could be recognized on non-like property (i.e., non-cash boot) given as part of the deal if such property (A) was not personal use property and (B) had a FMV less than its adjusted basis (e.g., stock that has declined in value)

iv. Compare this deferral to an exclusion

v. Boot : Why is it treated differently? (i.e., reasons for deferral are not present)

EXAMPLE. Jorge traded in computer equipment with an adjusted basis of $8,000 and a value of $10,000 for other (like-kind) computer equipment then valued at $9,000. Jorge also received $1,000 in cash as part of the deal. What was Jorge’s recognized gain on the exchange, if any?

a. $0

b. $1,000

c. $2,000

d. $10,000

EXAMPLE. Sabrina traded in office equipment with an adjusted basis and value of $10,000 for other (like-kind) office equipment then valued at $3,000. Sabrina also received $7,000 in cash as part of the deal. What was Sabrina’s recognized gain on the exchange, if any?

a. $0

b. $3,000

c. $7,000

d. $10,000

BASIS OF NEWLY ACQUIRED (“NEW”) PROPERTY

Basis in “new” like-kind property = FMV of like-kind property received:

– Deferred gain

+ Deferred loss

(This approach highlights how a deferred gain/loss is only temporary through an “artificial” basis adjustment)

(What is Jorge’s basis in the newly acquired computer equipment?)

OR :

ALTERNATIVE APPROACH: Basis in “new” like-kind property = Adjusted basis of like-kind property given: + Adjusted basis of boot given (and liabilities assumed by transferor)

+ Gain recognized

– FMV of boot received (and liabilities assumed by transferee)

– Loss recognized

f. Holding Period of like-kind property acquired generally includes holding period of property given (but, holding period for boot property begins on date received)

3. Involuntary Conversions (Section 1033) : Casualty, theft or condemnation (or threat of condemnation) may give TP the opportunity (via an election) to defer a gain provided that qualifying replacement property is timely acquired (the basis of the “new” property will be the cost/FMV of replacement property LESS the deferred gain). If the amount reinvested in replacement property equals or exceeds the amount realized, none of the realized gain is recognized (for now). But, if amount reinvested in replacement property is < the amount realized, gain is recognized to the extent of the deficiency (i.e., to the extent TP cashed out). Some mandatory rules:

a. No gain will be recognized if there is a direct conversion of property into similar property (i.e., instead of money).

b. If there is a realized loss on business or income-producing property, the loss must be recognized.

i. If condemnation of personal use asset, loss is NOT recognized; But, personal casualty/theft loss could provide an itemized deduction (remember the big 10% of AGI hurdle after the $100 per loss reduction for personal use assets).

What constitutes “qualifying replacement property” depends on whether TP is an:

(i) Owner-Investor (in which case the more flexible Taxpayer-Use test is used – i.e., properties must be used by the TP in similar endeavors – thus, a TP owner-investor replacing a manufacturing plant with a wholesale grocery warehouse would PASS, if both properties are rented out by TP); or,

(ii) Owner-User (in which case the more restrictive Functional-Use test is used – i.e., TP’s use of the properties must be the same – thus, a TP owner-user replacing a manufacturing plant with a wholesale grocery warehouse would FAIL). More liberal replacement rules apply for condemnation of business or investment real property. Time limits and reporting requirements also apply.

4. Possible Exclusion of Gain on Sale of Principal Residence (Section 121)

a. Qualifying individual.

i. Owned AND occupied as a principal residence for at least 2 of the 5 years before the sale (home in which TP lives; must look at all the facts and circumstances).

b. Exclusion applies to only one sale or exchange every 2 years.

c. Exclude up to $250,000 of gain from sale of a principal residence.

d. Exclude up to $500,000 if married and filing a joint return and:

i. Either spouse meets the ownership test;

ii. Both meet the use test; and,

iii. Neither is ineligible (because he/she sold a residence within the last 2 years).

e. Widowed TP’s period of ownership includes the period that the deceased spouse owned and used property.

EXAMPLE. In 2014, Mary and Jose sold a house to Andrea for $900,000. Prior the 2014 sale, neither Mary nor Jose had ever excluded a gain from the sale of a personal residence. Mary and Jose had lived in the house for the last ten years and used it exclusively for personal purposes. Mary and Jose had purchased the house for $200,000. Mary and Jose started living in the house immediately after purchasing it and never made any capital improvements to the house or took any depreciation (or other deductions) against it. Because of the slow market, there were no selling expenses. How much of a gain did Mary and Jose realize on the sale to Andrea (assume that Mary and Jose are married and file a joint return)?

a. $700,000

b. $500,000

c. $200,000

d. $0

EXAMPLE. Assume the facts stated in the previous example. How much of a gain must Mary and Jose recognize on the sale to Andrea?

a. $700,000

b. $500,000

c. $200,000

d. $0

f. Exclusion amount may be prorated if TPs don’t meet the above requirements AND certain conditions exist (i.e., TP must move for work, health reasons, or certain “unforeseen circumstances”)

g. May need to recapture some of the gain if depreciation was taken (e.g., home was also used for office) (importance of good records) (recaptured gain would be taxed at 25%).

h. TP may elect out of the nonrecognition – why?

i. Keep Section 1014’s stepped-up basis (upon death) in mind if very large potential gains

j. Potential reduction of exclusion for certain “nonqualified” uses started in 2009 (e.g., even if a TP passes the ownership and use test, TP may still have a % of the otherwise excludable gain become ineligible for exclusion as a result of renting out the property after January 1, 2009)

EXAMPLE. Which of the following is TRUE?

a. Section 1031 provides for a mandatory deferral upon certain exchanges

b. When compared to deferrals, exclusions are more permanent in nature

c. When compared to exclusions, deferrals are more temporary in nature

d. All of the above

5. Examples of Other NON-recognition Transactions:

a. CORPS: Section 1032 may provide no G/L to the corporation on the exchange of its stock for money or other property. Section 351 may provide no G/L to shareholders if property is contributed for stock of controlled corporation (for PARTNERSHIPS, Section 721 may provide no G/L to either partners or their partnership when property is contributed to the partnership in exchange for partnership interests).

b. Some stock-for-stock exchanges involving the same corporation. Section 1036.

c. Transfers of property between SPOUSES or incident to a divorce. Section 1041.

d. Rollover of gain from QSBS (held for > 6 months) into another QSBS (within 60 days). Section 1045.

CHAPTER 16

1. Capital Gains and Losses

a. What are they? Gains are capital or ordinary. Ordinary gains get taxed at TP’s ordinary (often higher) tax rate. Thus, ordinary gains are often less favorable. However, ordinary losses are subject to fewer limitations – so they are often preferred to capital losses.

b. Capital gains and losses arise from the sale or exchange of “capital assets” - people often think of capital assets as personal use assets and investment assets.

i. Section 1221 of the Code defines “capital asset” as any property held by a TP “except . . . “

1. The “except” list includes: inventory; accounts/notes receivable acquired in the ordinary course of a T or B; depreciable property and real estate (depreciable and non-depreciable) used in a T or B (but, under Section 1231, the sale of such property could still result in capital gain treatment); certain copyrights; certain US government publications; and supplies of the type usually used in a T or B.

ii. Basically, for individuals, everything that is owned and used for personal purposes (e.g., home/car) or investment (e.g., stocks/bonds) is a capital asset.

1. But, remember that losses on “personal use” property are generally not deductible (e.g., can’t deduct personal home loss absent a casualty/theft loss).

iii. CAPITALIZE [i.e., instead of deduct now] v. CAPITAL ASSET [i.e., certain assets under Section 1221] (sometimes people get confused)

iv. Again, capital gains are generally treated more favorably; however:

1. Generally, lower rate applies only if property is held long-term (i.e., held > 12 months)

2. Capital gains must exceed capital losses to really get the benefit of a lower rate.

3. Also, some or all of the long-term gains from a capital asset may still be taxable as ordinary income (to prevent TPs from shifting income from ordinary income rates to long-term capital gain rates – more to come) or may be taxed at rates higher than 20% (e.g., collectibles).

EXAMPLE: Kevin, who owns and operates a BIKE STORE as a sole proprietor, has the following property:

· BONDS held for Kevin’s investment

· a PAINTING inherited from Natalia (Kevin’s grandmother) (it hangs in Kevin’s home)

· CHAIRS in Kevin’s home

· COMPUTERS used exclusively for the BIKE STORE

Considering the above items, which option below lists the capital asset(s) under Section 1221?

a. Only the PAINTING and BONDS

b. Only the COMPUTERS

c. Only the PAINTING, CHAIRS, and BONDS

d. Each of the above assets is a capital asset under Section 1221

c. Recognition of a capital gain or loss typically involves a “sale or exchange” of a capital asset (but, other events can trigger capital gains/losses – e.g., securities becoming worthless, casualties, the retirement of corporate obligations).

d. IP items:

i. Patents – transfer of a patent is treated as a sale or exchange of a long-term capital asset when all the substantial rights to the patent are transferred by a holder.

ii. Trademark/Trade Name/Franchise – a franchise transfer is generally not a sale or exchange of a capital asset because the transferor retains significant power over, as well as rights and a continuing interest in, the property being transferred.

1. Franchisees capitalize noncontingent payments and amortize them over 15 years under Section 197 (subject to recapture under Section 1245) and franchisees deduct contingent payments as ordinary deductions.

e. Holding Period: Determining Short-term or Long-term.

i. Basically, Long-Term if time period between (i) when TP acquired the property and (ii) when TP disposed of the property, is more than 12 months (start counting the day after the property was acquired and include day of disposition).

ii. Some Exceptions:

1. Certain nontaxable exchanges/conversions or gifts where basis remains the same (upon the exchange/conversion or gift) – if so, prior holding period usually “tacks.”

2. Property acquired from a decedent.

a. Usually treat as LT no matter how long person receiving the property (and even the decedent) held it.

3. Nonbusiness bad debts treated as short-term capital loss regardless of the holding period.

f. Determination of Taxable Income: For Individual TPs, capital gains/losses are reported on the Schedule D

i. Any net short-term capital gain (asset held 1 year or less) is taxed at the ordinary income tax rate (thus no “special tax rate treatment”).

ii. Beginning in 2013, long-term capital gains are generally taxed at: (A) 0% (if TP is in the 10% or 15% bracket); (B) 15% (if TP is in the 25%, 28%, 33%, or 35% bracket); or, (C) 20% (if TP is in the 39.6% bracket). BUT:

1. 28% (if the long-term capital asset is a collectible stamp, coin, etc.)

2. 25% (for certain unrecaptured Section 1250 gains – i.e., gains on the sale of certain previously depreciated real property - discussed later)

g. Short-term gains and losses are netted against one another, and long-term gains and losses are netted against one another. The result will be NET short-term gain or loss and NET long-term gain or loss. If the two NET positions have opposite signs (one loss and one gain), they are netted against each other. There are SIX possibilities after all netting:

1. NSTCG

2. NLTCG

3. NSTCG & NLTCG

4. NSTCL

5. NLTCL

6. NSTCL & NLTCL

h. Because there may be both short- and long-term capital gains and losses (and because long-term capital gains may be taxed at different rates), there is an ordering procedure – which involves putting the gains and losses into four baskets: ST; 28%; 25%; and, 0%/15%/20% (see Steps 1 through 5 in the text). The procedure generally preserves the lowest tax rate long-term capital gain when there is a NET long-term capital gain.

i. Qualified dividend income is added to the net long-term capital gain portion of the net capital gain and is taxed as 0%/15%/20% gain.

j. Section 1 has statutory provisions that enable the net capital gain to be taxed at the special rates (i.e., 0%/15%/20%; 25%; and 28%). This “alternative tax” applies only if taxable income includes some long-term capital gain. If so, for each of the layers (that a net capital gain may be made up of), the TP will compare the regular tax rate on that layer of income to the applicable alternative tax rate (and apply the lower rate).

k. Losses higher: If TP has an excess of capital losses over capital gains, that excess is deducted from GI (but only) to the extent of the lesser of (a) the excess capital loss or (b) $3,000 (or $1,500 if married and filing separately). Excess net capital loss (i.e., the “unused” NCL) is carried forward indefinitely (retaining its ST and/or LT character) to offset capital gains in subsequent years. When a NCL includes both long-term and short-term loss, the short-term capital loss counts first towards the $3,000 limitation.

l. See Concept Summary 16.5

m. Also, recall from previous discussions that, beginning in 2013, there is additional 3.8% tax on the lesser of TP’s (a) net investment income or (b) MAGI in excess of a certain amount ($250K for joint TPs, $125 for married filing separately TPS, and $200K for single TPs). With these base amounts are indexed for inflation.

n. Corporate TPs:

· Corporate capital gains are taxed at regular rates with a maximum rate of 35%

· No deduction for net overall capital loss position

· Net overall capital loss can still be used by a corporation – it is treated as a short-term loss and carried back 3 years and carried forward 5 years – but only to offset capital gains

CHAPTER 17

1. Section 1231 Assets: Best of Both Worlds LTGCs & Ordinary Losses?

a. Per Section 1221, the capital asset definition excludes depreciable property and real estate (depreciable and non-depreciable) used in a T or B; but, Section 1231 may allow the gains on such assets to be taxed at favorable long-term capital gain rates; provided, however, that in the current year all of the gains from such assets exceed all of the losses from such assets. Thus, TPs must look at all the year’s transactions in order to determine how each transaction is treated:

i. If LOSSES>GAINS, each G/L is ordinary

ii. If GAINS>LOSSES, each G/L is capital (but, TP must look back 5 years to see if any of the current year gain needs to be “absorbed” by unrecaptured Section 1231 net losses before being eligible for favorable gain rate treatment on the property)

iii. Thus, Section 1231 may allow for both ordinary loss treatment (i.e., no $3,000 annual limit on the deduction) and capital gain treatment (i.e., favorable rates)!

iv. See Concept Summaries 17.1 and 17.3 for illustrations of the Section 1231 netting procedures (which also consider long-term nonpersonal use capital asset casualty gains and losses – which may get Section 1231 treatment or ordinary treatment, but will not get capital gain or loss treatment)

b. By definition, 1231 Assets must be held long-term

c. Assets that are NOT 1231 assets include: property not held LT; inventory; certain copyrights; certain U.S. government publications; and, accounts and note receivable arising in the ordinary course of business.

2. Recapturing Deductions : Discuss Theory.

a. Gain on sale of Section 1245 property. Generally, gains on depreciable personal property – a subcategory of 1231 assets (e.g., machinery, equipment, goodwill) – is taxable as ordinary income to the extent of previous depreciation taken (treat deductions under Section 179 as depreciation) on the asset up to the amount of the gain. Any excess gain (i.e., gain > previous depreciation) gets treated as 1231 gain. Thus, this excess gain may be taxed at the lower long-term capital gain rate (but remember to look back 5 years). For an “excess gain” to result, the sales price generally must > the original cost (i.e., the pre-depreciation basis).

EXAMPLE. In 2014, Dy sold a piece of equipment from Dy’s business for $225,000. The equipment was purchased in 2009 for $135,000. It had a useful life of five years and was depreciated on a straight-line basis. A total of $94,500 depreciation was taken (prior to the sale). What is Dy’s recognized gain on the sale?

a. $0

b. $90,000

c. $94,500

d. $184,500

EXAMPLE. Refer to the facts stated in the prior question. What amount of the gain will be recaptured at ordinary income rates?

a. $0

b. $90,000

c. $94,500

d. $184,500

EXAMPLE. Refer to the facts stated in the prior two questions. What amount of the gain will be treated as Section 1231 gain (and thus possibly taxed at the long-term capital gain rate)?

a. $0

b. $90,000

c. $94,500

d. $184,500

b. Gain on sale of Section 1250 property. Generally, gains on depreciable real property – another subcategory of 1231 assets (e.g., buildings, structural components) – could be taxed at three different rates:

i. Ordinary income rate (for any depreciation taken in excess of SL – up to the amount of the gain) (but unlikely since MACRS requires use of SL);

ii. 25% (for SL depreciation taken – up to the amount of the gain – this is “unrecaptured Section 1250 gain”); and,

iii. 0/15/20% for any remaining gain (i.e., after (i) and (ii)) which is treated as 1231 gain – which may be eligible for the long-term capital gain rate (remember 5 year look back)

But, differences in recapture rules for property acquired before 1981, after 1980 but before 1987, and after 1986. Also, differences between types of real property (thus, can get very complicated)

3. FORM 4797 & Instructions (for Sales of Business Property) :

http://www.irs.gov/pub/irs-pdf/f4797.pdf (PDF Form) http://www.irs.gov/instructions/i4797/index.html (Instructions)