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Calculating Gain or Loss from Dealings in Property

Calculating Gain or Loss from Dealings in Property

Learn how adjusted basis and amount realized drive the calculation of gain or loss from the disposition of property.

Transcript

In this lesson, we'll learn how to compute the amount of gain or loss from property dealings.

Introduction, General Rules

Gross income includes gain from dealings in property. 26 U.S.C. § 61(a)(3). A dealing in property is a sale or other disposition of property, that is, generally, any transaction in which property changes hands from the taxpayer to someone else. See id. at § 1001(a); Woodsam Assoc's, Inc. v. Comm'r of Internal Revenue, 198 F.2d 357 (2d. Cir. 1952).

Gain or loss on any...