ACC 307 Federal Taxation

Other

“Sales and Disposal of Assets” Please respond to the following:

  • Explain the impact that the adjusted basis has on the calculation of tax liability, and propose at least two (2) tax-planning strategies for reducing, eliminating, or deferring the payment of capital gains taxes. Also, discuss other alternatives aimed at optimizing deductions or reducing taxes, such as selling the property to an unrelated third party which, in turn, allows losses to be deductible expenses.
  • Imagine that you are a tax consultant, and a client needs your advice on how to reduce his tax liability on the sale of depreciable assets that have not been fully depreciated. The client has identified three (3) long-term depreciable assets and assumes that he will be able to pay capital gains taxes on the profit from their sale. It would be to your client’s advantage to treat a taxable gain as long-term capital gain to which lower rates apply and a loss is categorized as an ordinary loss, which can offset ordinary income. Discuss the treatment of gains and losses for Section 1231 and Section 1245 of the Internal Revenue Code, and recommend at least three (3) tax-planning strategies that would assist the client in reducing his tax liability. Provide support for your recommendations.

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