Arkansas Administrative Code
Agency 006 - Department of Finance and Administration
Division 05 - Division of Revenues
Regulation 1997-4 - Comprehensive Individual Income Tax Regulations
Rule 26-51-411 - GAIN OR LOSS - SALES OF PROPERTY
Rule 1.26-51-411(a) - Amount Realized on Disposition of Property

The amount realized from the sale or other disposition of property is the sum of any money received plus the fair market value of the property (other than money) received. The fair market value of the property is a question of fact, but only in rare and extraordinary cases does the property have no fair market value.

In computing the amount of gain or loss, however, the cost or other basis of the property shall be properly adjusted for any expenditure, receipt, loss or other item properly chargeable to capital account including the cost of improvements and betterment made to the property since the basic date and carrying charges such as taxes on nonproductive property. Where the taxpayer has elected to deduct carrying charges in computing net income or used such charges in determining his liability for filing returns of income for prior years, the cost or other basis may not be increased by such items in computing the gain or loss from the subsequent sale of such property. The cost or other basis of the property must also be decreased by the amount of the deductions for exhaustion, wear and tear, obsolescence and depletion which have, since the acquisition of the property, been allowable in respect of such property whether or not such deductions were claimed by the taxpayer or formally allowed. Adjustments to the cost or other basis on account of such allowable deductions as distinguished from the deductions actually taken in prior years will be made only on the basis of explicit and convincing evidence (calculations based upon a theoretical formula are not such evidence), that the deductions taken were insufficient or excessive, as the case may be, due regard being given to the expenditures made by the taxpayer to maintain the effective usefulness of the property.

In no case shall the amount of the diminution in respect to depletion exceed a depletion deduction computed without reference to discovery in the case of mines, oil and gas wells.

In the case of stock, the basis must be diminished by the amount of distributions previously made in respect of such stock to the extent that they have been a return of capital. The provisions of ACA 26-51-411 shall not be construed so as to conflict with the provisions of ACA 26-51-404(a)(2) which make special provisions for the reporting of income from the sale of property on the installment plan where the initial payment is 30 percentum or less.