[005]

Hey everyone, just a quick question if anyone has the time to help me out,

I understand for section 1250 recapture, you are taxed at 25% for the accumulated straight line depreciation taken on buildings; but does this apply to corporations as well or just individuals?

The reason I ask is because I know that for Section 291 you are supposed to take the accumulated depreciation and subtract it by the excess of accelerated over straight line, and then multiply that by 20%; so is the total taxed at 25% as well? My materials don’t tell me how section 291 recapture is taxed.

Thanks! and good luck everyone

BEC - ✔
REG - ✔
AUD - ✔
FAR - 11/29/14

CPAExcel, Ninja MCQs, and a sh*t ton of coffee

[Lindrobe]

This is what I have in my notes:

Section 1250 Property

Applies to real property held more than one year and sold at a gain but only if straight line depreciation is not used

• Unrecaptured Section 1250 Gain = lessor of:

1. gain on the sale of the property or

2. total depreciation taken on the property

• Unrecaptured Section 1250 Gain is taxed at 25%

• If straight line depreciation used, no Section 1250, entire gain is 1231 capital gain

Section 291

Only applies to corporations

• A corporation’s ordinary income on the sale of IRC Section 1250 property will be 20% of the lessor of:

1. Depreciation taken or

2. Recognized gain

• Remainder will be 1231 capital gain

FAR 12/3/14, 87
AUD 2/3/14, 90
BEC 4/1/14, 88
REG 5/27/14, 94

Licensed CPA, Indiana

"Successful people do things that unsuccessful people don't want to do"

[005]

awesome, thanks!

BEC - ✔
REG - ✔
AUD - ✔
FAR - 11/29/14

CPAExcel, Ninja MCQs, and a sh*t ton of coffee

[Picture Gearty in a pink dress]

I think this might be my first post ever, apparently I created this one night (between Oct '13 to today, Aug '14) during late night becker studies. I am 3/3 and REG is on monday. Always looked to another71 to read everyones thoughts…

Now, I just wanted to say thank you to 005 and lindrobe. One for making this thread, and the other for that perfect answer.

Go get'em 005

[Picture Gearty in a pink dress]

4/4 🙂

[Tux]

If section 291 is applied to the sale of section 1250 property,

then when do you use the rules for section 1250 vs the rules for section 291??

Is the only difference that 291 is for corporations and 1250 is for any other business structure?

FAR - 86 - 2/27/14
AUD - 75 - 5/29/14
BEC - 80 - 8/31/14
REG - 89 - 2/27/15
Praise Jesus! I'm done!!

Study resources:
Becker
Wiley test bank

[Author]

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