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Video instructions and help with filling out and completing Fill Form 4797 Recapture

Instructions and Help about Fill Form 4797 Recapture

Let's expand on the example that we had of purchasing the vehicle that $10,000 car with cash and what we're going to do is we're going to make it so that you sell it before the thing has become fully depreciated the big point here is that we're going to sell the car for something other than its Book value you have to remember that what you're doing with depreciation is your formulaic Lea deciding how it's losing value over time and when you make a transaction you find out how much it's actually worth and it's an absolute miracle if the book value of the vehicle is exactly the same as the sales price so what we're doing is we're starting with that $10,000 car which you have right there that we started with before um that's our cost basis we're dealing with the minimum acceptable turn of 5% that's almost irrelevant right now we're dealing with 35% federal tax rate at 7 point 7 percent state tax rate and just to go ahead and get the recollection if you're looking for that combined tax rate what you're doing is you're adding up the state and federal rate and then you're subtracting off the difference between those two so let's take a look over here at what we have lined up as that cash flow that's just the car and you can think of this is what it looks like from a personal finance basis there's your $10,000 going out the door because you're purchasing the vehicle and what we've done is said that we're going to sell this car for about $5,000 in the fourth year that you own it now look and see what happens with depreciation remember the depreciation is always just going to be the...