The holding period of an asset is measured in calendar months, beginning on the day after acquisition and including the disposal date.
It matters in the taxation treatment of the asset.
1. sale or exchange = acquisition holding period
2. gift for gain = donor's acquisition
3. gift for loss = acquisition
4. inheritance = automatic long-term
I didn't list all of the possible scenarios but there is other stuff like like-kind exchanges, involuntary conversions, partnership interests, etc.
Let's say that I inherit a personal-use car from an relative who passes away this year. To make this simple, let's assume that the executor of the relative's estate didn't elect an alternative valuation date or anything like that. My basis in the car is going to be the FMV at the date of the relative's death. My holding period is long-term. If I sell the car six months after receiving it at a gain, my basis for calculating the gain is the FMV at the date of the relative's death. The gain gets long-term capital gains treatment.
Hope that helps.
BEC = 72 (6/08/16)
FAR = ?
REG = ?
AUD = ?
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