MGMT 127A Lecture Notes - Lecture 16: Gross Profit, Ordinary Income, Automobilclub Von Deutschland
Document Summary
Realized gain/loss= amount realized - adjusted basis. Adjusted basis= cost + improvements - depreciation - partial disposition: partial disposition- selling off part of a property or part of it being destroyed. There are 3 exceptions to cost: transferring an asset from personal use to business use, an asset received via gift. Deciding whether to use fmv at date of the gift vs donor"s basis. A mom buys stock for 50 and now the fmv is worth 100 (so it appreciated in the mom"s hands) She now gifts it to her son- it does(cid:374)"t (cid:373)ake se(cid:374)se for the so(cid:374)"s (cid:271)asis to just (cid:271)e. 100 because no one would ever sell anything again they would just gift it and the person they gifted it to would sell it for no gain. In this case, the son"s basis would be the same as the mom"s basis- 50.
