recapture of depreciation


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Depreciation Recapture

A procedure the IRS uses to maximize tax revenue from depreciating assets by requiring the profit on the sale of a depreciating asset to be reported as ordinary income rather than capital gain. Because capital gains are taxed at a lower rate than most ordinary income, the IRS uses depreciating recapture to make up for some of the tax revenue lost in the depreciating asset. Depreciation recapture is assessed if the assets are sold for a price higher than their depreciated value.

recapture of depreciation

The extent to which the price received from selling a depreciated asset represents recovery of depreciation taken in prior years. For example, an asset purchased for $10,000, depreciated to a book value of $6,000, and sold for $9,000 would result in a recapture of $3,000. Also called depreciation recapture.

recapture of depreciation

Same as depreciation recapture.

Recapture of Depreciation

When depreciable property is sold, gain generally is taxed as ordinary income up to the amount of depreciation claimed (for personal property) and to the extent of the excess of accelerated depreciation claimed over straight-line depreciation that would have been allowed (real property). This ordinary income treatment is referred to as recapture.
References in periodicals archive ?
This can lead to a recapture of depreciation, which is taxable as corporate in: come, and a taxable capital gain on the sale.
Even after utilization of available net operating loss carryforwards, classifying Equinix assets as real estate is expected to result in a tax liability due to the reclassification to real property of certain assets that had been depreciated and amortized as personal property and the resulting recapture of depreciation and amortization expenses.
These side effects include, in taxable exchanges of cost-segregated property, possible recapture of depreciation under Sec.
Recapture of depreciation can be avoided via leasing selected assets to the buyer.
And remember, the tax on recapture of depreciation (cost recovery) is 25 percent.
The tax rate for a high-income taxpayer is 25% on the recapture of depreciation, while the regular tax rate is used for the recapture of depreciation for a low-income individual.
gain or loss, recapture of depreciation, recapture of investment tax credits, etc.
Equinix expects, in addition to its E&P distribution and recapture of depreciation and amortization expenses, to incur approximately $50 to $80 million in costs to support the conversion process.
The company plans to seek a Private Letter Ruling (PLR) from the IRS on a number of technical tax issues, including the characterization of its racking assets as real estate, which would result in a tax liability for the recapture of depreciation expenses.
com has announced the publication of 1031 Exchanges Made Simple, a practical guide to investing in real estate, increasing your wealth, and improving your income stream, while legally avoiding paying capital gains taxes and the recapture of depreciation.