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Taxable Transaction

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Taxable transaction
Any transaction that is not tax-free to the parties involved, such as a taxable acquisition.

Taxable Transaction
A transaction that results in one receiving income that may be taxed. Common taxable transactions are the reception of a paycheck or the sale of stock for a profit. Often, investors wait to sell securities until a certain time (such as a new calendar year) in order to minimize the taxable transactions that occur in a given period of time.


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355(a)(3)(B) provides that C stock acquired by D by reason of any taxable transaction that occurs within five years of the stock distribution will not be treated as C stock but as other property (hot stock).
A foreclosure or a "deed-in-lieu" of foreclosure creates a taxable transaction for both you and the borrower.
Since the funds derived from the original property are never actually received by the taxpayer, the theory is that there is no taxable transaction and thus no taxes are due.
 
 
 
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