Form 1040 Part 3: Property Income

Overview

Investing in property is a large expense, and with the addition of companies like Airbnb and VRBO it is easier than ever to recoup expenses by renting out property for periods of time. However, it's important to know the different tax rules that apply depending on if the taxpayer renting the property used the property as a residence at any time during the year.

This course focuses on the tax treatment of transactions related to property owned by an individual taxpayer. Although such property may take many different forms such as real estate, financial instruments such as stocks, bonds, and mutual funds, motor vehicles, jewelry or collectibles; the course highlights the common principles that apply to handling income received from these sources. These principles are used to calculate the amount of a taxpayer's gain or loss on a given property transaction as well as how the gain or loss should be treated for tax purposes.

Learning Objectives

After completing this course students will be able to:
  • identify the general tax treatment of rental income and rental expenses
  • correctly apply the rules governing the tax treatment of rental property used for personal purposes by the taxpayer
  • correctly determine the basis in property acquired through such means as purchase, gift, and inheritance
  • correctly calculate the gain or loss on the sale or trade of property
  • apply the general rules governing the tax treatment of gains and losses from investment transactions
  • apply the federal tax rules concerning the exclusion of gain on the sale of a main home to correctly calculate the taxable gain or loss on such sales

Tax Year: 2020

Designed For

Newer tax professionals and those looking for a basic review of the tax treatment of transactions related to property owned by an individual taxpayer.
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