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Ethics CPE Applicable to Addressing Proceeds From Selling Anything

Ethics CPE Applicable to Addressing Proceeds From Selling Anything

Enrolled agents should be aware about advising tax clients of the impact from selling any property. The IRS considers everything a capital asset. All gains are taxable. Some assets even receive special tax considerations.

Failure to report a taxable sale results in an understatement of income. The purpose of an enrolled agent ethics course is to provide training to identify all taxable income. But determining if sale proceeds are subject to tax requires a few details.

Gathering information from a taxpayer about a sold asset is a process for applying ethics CPE. An enrolled agent knows to first obtain the cost basis of the asset to determine if the sale created a capital gain. This is not always so easy with some taxpayers, who fail to maintain records of basis.

Property received as inheritance or gifts have a different basis than cost. So the learning from EA continuing education is handy for methodically deducing the basis for sold property. In addition, when there is a sale of inherited property, it is always taxed at the lower long-term capital gain rate regardless of how long it was held by the seller.

Although all gains are taxable income, a loss is only reported on income-producing property used for business or investment activity. These capital losses are deductible against taxable income.

There is no reporting or deduction for personal-use assets. However, some personal assets are considered “collectibles” under the tax code. In fact, items that are normally part of collections incur a higher tax rate when sold for gains.

An enrolled agent course teaches the technical process for reporting gains and losses. Proficiency in completing Schedule D is only part of the knowledge acquired. An enrolled agent possesses the high level of expertise for determining basis, reporting gains when applicable, and applying the correct tax rate.

Helping taxpayers with sold property is also a sound method for retaining long-term client relationships. That is because there is often a need to carry forward losses. Since taxpayers frequently misunderstand the record keeping for basis of capital assets, they are also likely to need assistance with accurate carryover records. When taxpayers use enrolled agents for tax services, they have assurance of not overlooking the tax benefits of carried forward capital losses.

IRS Circular 230 Disclosure

Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.