1250 recapture on dispositions of long-term depreciable realty by using
straight-line depreciation, most or all of the Sec.
If each asset has an expected life of five years, with no residual value, and
straight-line depreciation is used, the book value at the end of year one would be $120,000 ($150,000 - $30,000).
(1) Although the Federal long-term capital gain rate is currently only 15%,
straight-line depreciation recapture on real estate is 25%.
A classic example is the use of accelerated depreciation for tax purposes and
straight-line depreciation for accounting purposes.
Electing
straight-line depreciation for aircraft placed in service after the AJCA enactment date.
An example of this is the book-tax difference arising from accelerated cost recovery system (ACRS) depreciation used for tax purposes and
straight-line depreciation used for financial reporting.
168(e)(3)(E)(v) and (e)(7), allows 15-year
straight-line depreciation for improvements made to buildings used predominantly as restaurants.
For instance, T used
straight-line depreciation, so the software needed to be configured to produce this result.
If Harry had used ACRS
straight-line depreciation rather than accelerated depreciation, he would not have any depreciation recapture to report in the sale year.
Initially, B's corporate tax returns identified the gas stations as nonresidential real property under the modified accelerated cost recovery system (MACRS) rules, and used
straight-line depreciation for periods of 31.5 or 39 years on its 1993-1995 returns.
Specifically, it used a
straight-line depreciation method with a two-year recovery period (i.e., a method expressed in terms of years).
1250 gain (i.e., the
straight-line depreciation) will be taxed at 25% under Sec.
