Question

T/F

25. A gift of appreciated depreciable property does not result in current or future recapture of depreciation or cost-recovery deductions by the donor under Sec. 1245 or Sec. 1250.

26. If gain is not recognized in a like-kind exchange, the recapture potential is eliminated.

27. In an installment sale of business machinery recapture income must be recognized in the year of sale, even if no payments are received.

Answer 1

25 - False

Explanation: A donor cannot escape depreciation recapture by gifting the property. The depreciation recapture requirement attaches to the donee.

26 - False

Depreciation recapture potential carries over to the property received in a like-kind exchange

27 - True

If you sell property for which you claimed or could have claimed a depreciation deduction, you must report any depreciation recapture income in the year of sale, whether or not an installment payment was received that year.