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Video instructions and help with filling out and completing Can Form 4797 Charities

Instructions and Help about Can Form 4797 Charities

On corporate depreciation recapture, the material in this chapter is generally basic. If there is any medium material, it is in brown, and difficult material is in green. - Section 291 recapture is an additional layer of depreciation recapture beyond the recapture that already exists for sections 1245 and 1250 properties. So, if there's a gain on depreciable property, there may be a recapture of the depreciation on that gain. - Section 291 is in addition to any other section 1245 and 1250 recapture that would apply. Section 1245 and 1250 assets are types of section 1231 assets. These include land (which is not depreciated), depreciable personal and intangible property (normally found under section 1245), and depreciable real property like buildings (normally found under Code section 1250). - There are periods in our history where that changes, but those periods tend to be older and only in very old cases, going back to the 80s and 90s, for example, would we see sections 1245 and 1250 generally apply. - Section 291 only applies to corporations, not to partnerships and flow-through entities or individuals. - The section 291 recapture rate is 20% of the lesser of the recognized gain on the sale of the depreciable property or the accumulated depreciation taken on the property to date. - Let's do a section 291 example. Suppose a corporation purchases a warehouse for $250,000. Several years later, the corporation sells the warehouse for $350,000. Throughout the life of owning the warehouse, they have deducted $50,000 in accumulated depreciation. - The depreciation recapture for section 291 is 20% of the lesser of the recognized gain or the accumulated depreciation. The accumulated depreciation is $50,000. Now we need to find the recognized gain on the sale. - The gain on the sale is the proceeds minus the adjusted basis. In this case, the proceeds...