If the realized gain is less than depreciation, then how do you calculate depreciation recapture?
Or what if the realized gain is the same amount as depreciation?
Thanks!作者: stalkey 时间: 2011-7-15 23:55
Then 100% of the gain is recaputre. You always recapture depreciation first, then you have normal capital gains.作者: cfalevel2011 时间: 2011-7-16 00:35
"You pay depreciation recapture taxes for the amount of your capital gains above the
book value."
Yes, but only up to the extent of cumulative depreciation.
Quick example:
$100 original cost
$20 Depreciation
$80 Book Value
Sell for $110
Gain is split: $20 Recapture (higher rate), $10 (Capital Gain)
Reasoning (if you care) :-).
Depreciation offsets ordinary income, so if you recover it, the government feels the need to tax you at ordinary income rates for that piece of the gain. Any amount above that is deemed investment (capital) gain.作者: Kapie 时间: 2011-7-16 00:53
In OP question depreciation is higher or equal to capital gains.
freecmorgan Wrote:
-------------------------------------------------------
> "You pay depreciation recapture taxes for the
> amount of your capital gains above the
> book value."
>
> Yes, but only up to the extent of cumulative
> depreciation.
>
> Quick example:
>
> $100 original cost
>
> $20 Depreciation
>
> $80 Book Value
>
> Sell for $110
>
> Gain is split: $20 Recapture (higher rate), $10
> (Capital Gain)
>
> Reasoning (if you care) :-).
>
> Depreciation offsets ordinary income, so if you
> recover it, the government feels the need to tax
> you at ordinary income rates for that piece of the
> gain. Any amount above that is deemed investment
> (capital) gain.
Edited 2 time(s). Last edit at Friday, June 3, 2011 at 08:11PM by jpsi1.
