Can Form 4797 Comments 2022-2023

Instructions and Help about Can Form 4797 Comments

This review is for depreciation recapture provisions on page 7 - 21 of your text recall that business assets are considered Code section 1231 property so these assets are broken down in to land which is not depreciable so it is a pure section 1231 asset or its personal property like equipment furniture and computers that's section 1245 property and these items are depreciated then you have real estate and other like rental property and other real property that fall under Section 1215 these items are depreciated also so when we sell section 1245 and section 1250 assets we have to remember the depreciation recapture provisions when we sell assets some of the gains are get preferential tax treatment or lower tax rates so gains on depreciated property like section 1245 and section 1250 assets occur because every time an asset is depreciated its basis gets lower and lower so if there's a gain on section 1245 or section 1250 assets some of it may have been due to the depreciation lowering the basis of the asset so since businesses have already benefited from taking depreciation on assets as an expense year after year the IRS does not want businesses to get another tax benefit by getting preferential tax treatment on gains due to depreciation therefore we have to look at section 1245 and section 1252 section 1252 12:45 games first so section 1245 assets our personal trader business property subject to depreciation like we have up here equipment furniture and fixtures so any gain on the sale of section 1245 assets in excess of depreciation gets preferential tax treatments or capital gain rates and we know that those are lower than our ordinary tax rates that we typically pay then the gain on the amount of depreciation is taxed...