Chapter 12 - Introduction to the Taxation of
Property Transactions
Updates
Individual Capital Gains Rates:
(page 396) In July 1998, the IRS Restructuring and Reform
Act of 1998 was enacted. In addition to changes in the
organizational structure of the IRS and the addition of
new taxpayer rights, this legislation also changed the
required holding period for non-corporate taxpayers to
obtain the reduced capital gains tax rates. The new
holding period for the 10%, 20% and 25% rates was changed
from over 18 months to over one year for sales and
exchanges of capital assets that occur on or after
January 1, 1998. Thus, Table 12-2 on page 396 should be
updated by changing "18 months" in the first
row to "one year", and eliminating the second
row.
Deferral of Gain on Qualified
Small Business Stock: (page 408) The IRS
Restructuring and Reform Act of 1998 clarified the
special tax rpovision that allows owners of IRC Section
1202 qualified small-business stock to elect to defer
their gain. The Act contained several "technical
corrections" to the Taxpayer Relief Act of 1997. The
relevant change for the Section 1202 stock is that the
special gain deferral rule applies to
"non-corporate" owners. Thus, the first line on
page 409 should be changed from "individual
owners" to "non-corporate owners". With
this change, gain deferral would also apply to Section
1202 stock owned and sold by a partnership.
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Last updated on October 12,
1998.
Tax Aspects of Business Transactions: A First Course, by
Annette Nellen
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