Transfer of Large Amounts of Funds?

[Zedder]

The income versus capital gains determination is usually a function of the time the asset was held and the number of transactions that took place during the tax year. A general rule of thumb is that an asset must be held for at least one year to be deemed a sale of personal property that is taxable at capital gains rates. Anything less than that amount of time is usually considered regular income.

[YENKO DEUCE REGISTRY]

Then why the need for short-term vs. long-term cap. gains rates? If something held for less than one year is misc. income, there wouldn't need to be a short term cap. rate

[Zedder]

I can't speak for the US regulations, but here in Canada the regulations that we are talking about apply to the sale or "real personal property" - cars, boats, antiques, etc. and the time restraints are imposed to discourage "flipping" of personal property for income purposes without paying the associated income tax rates. When researching this last year, one interest loop-hole I found was for parts sales. Any real property purchased is assumed to be purchased for a minimum of $1,000 regardless of what you paid for it. Capital gains or income generated is therefore calculated on the selling price minus $1,000. So, you can basically sell all of the parts that you like without tax implications as long as the selling price is less than $1,000. I don't sell parts, so it makes no difference to me, but those who sell via ebay can have a nice little side income coming in.

[427king]

"So, you can basically sell all of the parts that you like without tax implications as long as the selling price is less than $1,000"...........If this were true in the US, id have retired 15 years ago ...Actually while it may or may not be a loophole in Canada to get that 1000.00 exemption as im not familiar with the tax code there , im certain if you utilize that loophole say 100 times a year with intent to avoid business income , you will find yourself on the losing end if you are audited.

[69LM1]

Here's what we are having issues with here. Per the IRS, they plan on auditing 1 in 10 people in Katrina effected areas. Just met with the CPA re: housing. It seems as if the IRS wants you to claim your loss of your house at PURCHASE price, which, to someone who purchased a house 10 yrs ago, means that you cannot take the increase in property value (no appreciation loss). HOWEVER, on contents, they are depreciated based on purchase date, condition etc. They get you both ways!

[YENKO DEUCE REGISTRY]

So, any U.S. tax experts have any input on whether the sale of an old car is treated as an investment subjected to cap.gains tax rates, or is it misc. income subjected to income tax rates? (Jim Hughes maybe )

[Mr70]

We need an experienced savy bean counter to log on.