Tax Consequences of Property Transactions

Property transactions (like selling stocks or real estate) can trigger gains or losses for tax purposes. CPAs must understand how to calculate and report these events.

Capital Gains and Losses

• Short-Term: Assets held for one year or less.
• Long-Term: Assets held for more than one year.

The holding period affects the tax rate applied.

Basis Calculations

The basis is generally the cost of the property. Adjusted basis accounts for improvements, depreciation, and other factors.

Like-Kind Exchanges

Section 1031 allows certain business or investment property exchanges without immediate tax consequences.

Real-World Scenarios

CPAs help clients minimize taxes by timing sales and leveraging tax-advantaged exchanges.