Section 1231 Assets Flashcards
1
Q
What is depreciation recapture?
A
-Recharacterizes gains as ordinary income
2
Q
What is Section 1245 recapture?
A
- Recharacterizes gains on personalty as ordinary income to extent of accumulated deprecation
- Same for corporations and individuals
3
Q
What is Section 1250 recapture?
A
-Recapture of accumulated accelerated deprecation on buildings in excess of straight line as ordinary income
4
Q
For buildings owned by individuals, how do we treat the accumulated straight line depreciation?
A
-As eligible for a special 25% tax rate
5
Q
Does recapture recharacterize losses?
A
No
6
Q
How do you calculate Section 291 recapture for buildings for corporations?
A
Section 1245 recapture IF property had been 1245 property
-Actual Section 1250 recapture
Excess amount x 20%
7
Q
How do we treat Section 1231 gains and losses?
A
- Net all 1231 gains and losses
- Net 1231 gains treated as LTCGs
- Net 1231 losses treated os ordinary losses
- Lookback provision: Section 1231 gains must be offset by previous 5 years Section 1231 losses recapturing these gains as ordinary income
