(BQ) Part 2 book "Taxation for decision makers" has contents: Tax deferred exchanges, taxation of corporations, sole proprietorships and flow through entities, income taxation of individuals, wealth transfer taxes,.and other contents. | chapter Tax-Deferred Exchanges 8 M ost taxpayers would like to arrange their property transactions so they can recognize their losses and avoid recognizing their gains. Absent the complete nonrecognition of gain, the deferral of gain recognition reduces taxes due to the time value of money. This chapter focuses on provisions that defer gains such as like-kind exchanges, involuntary conversions, and transfers to businesses by their owners. Taxpayers must follow specific rules, however, to take advantage of gain deferral. Some of these transactions, such as like-kind exchanges and asset transfers to businesses by their owners, defer losses as well as gains. If the taxpayer wants to recognize the loss rather than deferring it, the relevant provisions must be understood so that a transaction will not qualify for loss deferral. An important set of deferral provisions allows taxpayers to transfer assets to sole proprietorships, partnerships, or controlled corporations in exchange for an ownership interest in the business. These provisions allow the tax laws to remain neutral in relation to the selection of business form by taxpayers. Complex tax laws affect the reorganization of corporations through mergers and acquisitions. Adherence to the specific provisions applicable to all parties involved in a reorganization is necessary to defer gains. A basic explanation of reorganizations is provided in the appendix to this chapter. The purpose of this chapter is to familiarize the reader with the basics of these tax-deferred transactions so that they can be used to advantage when planning asset transfers. KEY CONCEPTS ★ A tax-deferred sale or exchange postpones gain or loss recognition to a future transaction by adjusting the basis of the asset acquired; a deferred gain causes a reduction in an asset’s basis while a deferred loss causes an increase in an asset’s basis. ★ Boot received in an otherwise tax-deferred exchange may cause all or part of the
