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Basis and capital gains

SEE 1 Chapter 13 · IRS outline 2C2, 2C3, 2C4, 2C8, 2C10, 2C11

Every sale starts with one question: what was the basis? The answer depends on how the taxpayer got the asset: bought it, received it as a gift, inherited it, got it through a stock split, earned it as stock compensation or mined it as crypto. Then gains and losses are netted and taxed at rates from 0% to 28%. Lily inherited stock, Kofi received shares from his grandmother, Grace has stock options and Daniel dabbles in crypto. Nadia's rule: find the basis, find the holding period, then net.

In this chapter

1. Capital assets, holding period and rates
2. Netting gains and losses, wash sales and worthless stock
3. Basis of purchased, gifted and inherited property
4. Stock splits, stock dividends and finding old basis
5. Digital assets
6. Options, incentive stock options and ESPPs
7. Nonbusiness bad debts and investor versus trader

This chapter has 7 lessons and 71 practice MCQs with explanations, plus flashcards and a recall sheet.

What this chapter covers

• Basis of purchased, gifted and inherited property
• stock splits and dividends
• netting gains and losses
• digital assets
• options, ISOs and ESPPs
• bad debts
• investor or trader

Chapter 12: Retirement distributions, RMDs, inherited accounts and Social Security · Chapter 14: Sales of property: home, installment, like-kind and recapture