Chapter 7 Objectives

1. Distinguish between the concepts of gain or loss realization and gain or loss recognition.

2. Describe the installment sale method and its effect on the timing of gain recognition.

3. Explain why the law prevents taxpayers from recognizing losses realized on sales of property to related parties.

4. Identify the two components of the definition of capital gain or loss.

5. List the five categories of noncapital assets.

6. Define the limitation on the deductibility of capital losses.

7. Differentiate between the carryback and carryforward rules for net capital losses incurred by individuals and by corporations.

8. Apply the Section 1231 netting process to characterize gains and losses.

9. Incorporate the loss recapture and depreciation recapture rules into the Section 1231 netting process.

10. Describe the tax consequences of property dispositions that don't involve a sale or exchange.