In an installment sale, the contract price (tax) is the selling price less any existing mortgages assumed by the buyer. Understanding this term is crucial for accurate tax calculations and compliance.
Deferred gain refers to the amount of gain that is realized but not recognized at the time of a transaction, commonly occurring in tax-deferred exchanges, often known as 1031 exchanges. Essentially, deferred gain allows taxpayers to defer paying taxes on capital gains by reinvesting the proceeds in like-kind properties.
Depreciable basis refers to the portion of an asset’s cost that can be depreciated over its useful life for tax purposes. It is an essential concept in the calculation of depreciation expenses, influencing both financial reporting and tax liabilities.
Recognized gain is the portion of a realized gain that is subject to taxation in a so-called tax-free exchange, such as under the IRS Section 1031 rule.
A stepped-up basis is an adjustment to the tax basis of inherited property, increasing the basis to the property's fair market value at the time of the original owner's death, thus minimizing capital gains tax for the heirs.
Tax Basis, also known as Basis (Tax), refers to the original value of a property or asset for tax purposes, with potential adjustments over time reflecting improvements, depreciation, or other factors.
