recognized gain

Realized Gain

The amount by which the sale price of an asset exceeds its purchase price. Unless the realized gain came from a tax-exempt or tax-deferred asset, it is taxable. However, the type of taxation to which it is subject varies according to how long the asset has been owned. A realized gain from an asset owned longer than one year is usually taxed at the capital gains rate, while an asset owned for a period shorter than a year is often subject to the higher income tax rate. It is also called the recognized gain. See also: Unrealized gain.

recognized gain

That portion of a sale profit that is taxable.When a person has a gain on the sale of property,it is said the person realizes gain. Under certain beneficial tax provisions,the seller may not have to pay taxes because the gain is not recognized at that time—the IRS chooses to ignore it for one reason or another.Normally,all gain is recognized unless it falls within one of the exceptions allowing deferral until a later date,such as a 1031 exchange, or excluded completely,such as sale of a principal residence for less than the ceiling amount of gain.
References in periodicals archive ?
Affirming a Tax Court decision, the Eighth Circuit held that a taxpayer who repossessed his former principal residence after the buyer defaulted had to recognize gain equal to the excess of the cash received over the previously recognized gain. According to the court, the taxpayer could not use an exception to the gain recognition rule because he did not resell the property within the one-year period prescribed in the exception.
704(c)(1)(B) rules, the distributee member's basis in the distributed property is the LLC's basis in the property immediately before the distribution increased by any gain recognized by the contributing member or decreased by any loss recognized by the contributing membet The contributing member's basis in his or her LLC interest is also increased or decreased to reflect the recognized gain or loss (Regs.
This will result in a lowering of the basis in the replacement property so when that property is sold, the taxpayer will have to pay taxes on the recognized gain that reflects profits realized on both the first and second properties.
[sections] 1.865-2(b)(2), loss recognized on the disposition of an 80-percent owned foreign affiliate will reduce foreign-source passive income if, within the past five years, the seller (or a consolidated group member) recognized gain on the disposition of a foreign affiliate that was sourced under section 865(f).
1038(b) requires the recognition of gain equal to the amount of cash and fair market value of other property received, minus the amount of previously recognized gain. The amount of recognized gain is limited to the property's selling price minus its adjusted basis, less any previously recognized gain and repossession costs.
Since the corporation must compute its gains and losses on an asset-by-asset basis, H would have a recognized gain of $25,000 from the land and an unrecognized loss of $20,000 from the I stock, if those assets were transferred to redeem E's shares.
A transaction is subject to the existing temporary regulations under section 367(b) if it (i) involves an exchange under section 332, 351, 354, 355, 356, or 361 with respect to which foreign corporate status is relevant to the determination of recognized gain, and (ii) does not involve a property transfer "described in section 367(a)." (26) The existing regulations under section 367(b) imposed both procedural and substantive requirements.
The former would be triggered, for example, if X redeemed all of A's remaining shares; the latter would be triggered, for example, if A sold the remaining 50 shares to an unrelated third party for a $30 recognized gain. Both of these events would allow A to recognize a $30 capital loss.
However, a consistency rule would require a loss recognized on the sale of an 80%-owned foreign affiliate to reduce foreign source passive income if, within the past five years, the seller had recognized gain on the sale of a foreign affiliate sourced under the foreign affiliate stock rule.
Although the securities the outside investors receive will be deemed boot, they will not recognize any gain on the transaction, because recognized gain is limited to the lesser of boot received or gain realized.
If H later sells or exchanges the new machine, he will have to report, at a minimum, the first $1,000 of recognized gain as ordinary income.
The recapture provisions generally do not determine the realized or recognized gain or loss on an asset's disposal; rather, they determine only the tax character of any gain.

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