What does built-in loss mean on the CPA exam?
Built-in loss. Loss that already existed in property before it changed hands, measured at the transfer date. Special rules stop it being shifted to a different taxpayer.
Defined against Sec. 704(c)(1)(C).
Which CPA exam sections use built-in loss?
Built-in loss appears in the TCP section of the CPA exam.
Related terms
- excess business loss: The amount by which a noncorporate taxpayer's aggregate business deductions exceed business income plus a threshold.
- acquisition-date fair value: What something was worth on the day control changed hands.
- capital loss: Loss on the sale of a capital asset.
- disallowed loss: A loss the Code refuses to let you deduct, typically on a sale to a related person or a wash sale.
- ordinary loss: A loss deductible against ordinary income without the capital loss limits.
- balance sheet date: The last day of the reporting period.