Capital Gain or Ordinary Income? (Currently Unavailable)

Author: Jennifer Kowal

Recognizing which assets are capital assets can save significant tax amounts, especially with a rate difference of more than 20 percent between long-term capital gain and ordinary income. This on-demand course will provide detailed training on the types of assets that produce long-term capital gain and loss upon sale, with case studies involving real estate, intellectual property, internet based sales, and more. Ms. Kowal will also explain the applicability of the five different possible capital gain rates that apply to different types of income, and the applicability of the 3.8% Medicare tax to certain capital gain transactions.

Publication Date: October 2018

Designed For
Tax practitioners at all levels who provide advice and return preparation involving sale transactions.

Topics Covered

• Definition of capital asset
• Explanation of five different capital gain rates and when each applies
• Capital gain and loss netting rules
• 3.8% Medicare tax on unearned income as applied to capital gain transactions
• Recognize which assets are capital assets
• How to net capital gains and losses together
• How to calculate the correct capital gain rates on various types of capital assets

Learning Objectives

• Recognize which assets are capital assets
• Identify how to net capital gains and losses together
• Differentiate how to calculate the correct capital gain rates on various types of capital assets
• Identify a reason for giving preference to a capital gain
• Identify the steps in capital gain mechanics
• Describe the steps in the "stair-step" approach to long-term capital gain treatment
• Recognize correct statements with respect to the additional Medicare tax on unearned income
• Identify one of the most important factors when determining whether property is held for sale to customers in ordinary course of business
• Recognize correct statements with respect to selling contract rights
• Recognize which assets are capital assets can save significant tax amounts
• Differentiate IRC Sections and how they apply
• Identify how many possible outcomes are there relating to capital gain and loss netting
• Recognize the percent added onto the capital gains of high income taxpayers for additional Medicare tax
• Identify excluded types of property considered to be a capital asset to a taxpayer
• Describe an example of a capital asset contract right
• Describe an example of a "mere" right to receive profits and thus ordinary assets right

Level
Intermediate

Instructional Method
Self-Study

NASBA Field of Study
Taxes (2 hours)

Program Prerequisites
Basic familiarity with sale transactions and how to calculate gain and loss.

Advance Preparation
None