Taxable Gains on Asset Sales

When companies dispose of assets used in their trade or business, they often recognize taxable gains because tax depreciation has been taken on the assets that exceeds the actual reduction in the fair market value (FMV) of the asset. The basis of these assets is often lower under the bonus deprecaition rules, creating even higher taxable gains.

Realized Gain or Loss usually occurs when property is sold. A gain is the amount you realize from a sale or exchange of property that is more than its adjusted basis. A loss is the adjusted basis of the property that is more than the amount you realize.

Recognized Gain or Loss is the amount of realized gain or loss that is taxable or deductible for income tax purposes. 

Like Kind Exchange is a method available to reduce the amount of recognized gain and the corresponding tax liability. The benefits of like kind exchange for personal property result when taxpayers are able to achieve systematic gain deferral in regard to ongoing exchanges of their business assets. The benefit remains in effect for as long as the taxpayer maintains their investment in the portfolio of qualifying assets. 

PwC-eLKE can help companies automate their Like Kind Exchange programs and provide for ongoing gain deferral on asset sales.

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