Related-Party, Worthless Security, and Disposition Complications

This chapter covers the rules that complicate an otherwise straightforward disposition answer. Related-party attribution, wash-sale timing, worthlessness, abandonment, and state sourcing can all override the normal gain-or-loss framework if the fact pattern includes the wrong relationship, security, or jurisdiction.

In This Chapter

• Related-Party Loss Disallowance, Constructive Ownership, and Deferred Gain Rules covers the attribution rules that prevent immediate tax benefits in related-party transactions.
• Wash Sales, Substantially Identical Securities, and Worthlessness Treatment addresses loss deferral and timing issues for securities transactions.
• Abandonments, Partial Dispositions, and Basis Allocation for Real Property explains less-common real-property retirements and basis allocation problems.
• Multi-Jurisdictional Property Dispositions and State Tax Sourcing Issues covers how state and local rules change the tax result across jurisdictions.

How to Use This Chapter

• Read the related-party and wash-sale lessons together because both suspend or delay losses that look deductible at first glance.
• Keep the state-sourcing lesson in mind when a disposition fact pattern includes property, operations, or withholding across more than one state.

In this section

• Related-Party Loss Disallowance, Constructive Ownership, and Deferred Gain Rules
  Related-party property rules covering loss disallowance, ownership attribution, and deferred gain consequences.
• Wash Sales, Substantially Identical Securities, and Worthlessness Treatment
  Wash-sale timing rules and worthless-security treatment for stock and debt instruments.
• Abandonments, Partial Dispositions, and Basis Allocation for Real Property
  Real-property disposition rules covering abandonments, partial retirements, and basis allocation.
• Multi-Jurisdictional Property Dispositions and State Tax Sourcing Issues
  State and local sourcing issues for property transactions spanning multiple jurisdictions.