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Maximize Tax Savings: Understand Capital and Ordinary Gains and Losses
ARTICLE | July 15, 2024
Authored by Vasquez + Company
Understanding the tax implications of selling assets is crucial, as the classification of gains and losses—either capital or ordinary—can significantly impact your federal income tax obligations. Capital gains and losses stem from selling capital assets, while ordinary gains and losses result from selling other types of assets. Distinguishing between these can lead to substantial differences in tax rates, with long-term capital gains (LTCGs) typically taxed at lower rates than ordinary gains. Moreover, capital losses face stricter deductibility limits compared to ordinary losses. Taxpayers selling business real estate must be especially mindful, as factors like the frequency of sales and nature of the property's acquisition can influence its classification.
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Our firm provides the information for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. This article is not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided “as is,” with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
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Vasquez + Company LLP has over 50 years of experience in performing audit, tax, accounting, and consulting services for all types of nonprofit organizations, governmental entities, and private companies. We are the largest minority-controlled accounting firm in the United States and the only one to have global operations and certified as MBE with the Supplier Clearinghouse for the Utility Supplier Diversity Program of the California Public Utilities Commission.
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