Philip and Margery Skalka - Page 11

                                       - 10 -                                         

          is without merit.  Petitioners’ claim is made without a clear               
          understanding of section 1(h) and its interaction with section              
          1250.                                                                       
               For the 1997 tax year, the maximum capital gains rate is               
          generally 20 percent on the gain from the disposition of a                  
          capital asset held more than 18 months and sold after July 28,              
          1997.  However, the 20-percent rate does not apply to                       
          unrecaptured section 1250 gain, which is subject to a 25-percent            
          tax rate.  See sec. 1(h)(1)(B).                                             
               Pursuant to the pertinent part of section 1231(b), “property           
          used in the trade or business” means real property used in a                
          trade or business, held for more than 1 year, and subject to the            
          allowance for depreciation.  Since petitioners’ investment                  
          property meets these criteria, the property is section 1231                 
          property.  Pursuant to section 1231(a)(3)(A)(i), the term                   
          “section 1231 gain” means any recognized gain on the sale or                
          exchange of property used in a trade or business.  Likewise, the            
          term “section 1231 loss” means any recognized loss from a sale or           
          exchange of property used in a trade or business.  Sec.                     
          1231(a)(3)(B).  If, as here, the section 1231 gains exceed the              
          section 1231 losses for the year, the gains and losses shall be             
          treated as long-term capital gains and long-term capital losses,            








Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  Next

Last modified: May 25, 2011