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Class 3f Gains & Losses Depreciation Recapture

Class 3f Gains & Losses Depreciation Recapture -...

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Taxation of the Business Entity Online Lecture Series Depreciation Recapture Presented by Akore Berliner, CPA
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GAIN / LOSS FORMULA $ Amount Realized $ Less: Adjusted Basis = Gain or Loss
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TYPES OF GAINS &  LOSSES Capital Gains / Losses From Sale of Capital Assets Taxed at capital gain rates Ordinary Gains / Losses From Business Operations From Sale of Ordinary Assets  (Inventory, Receivables) Taxed at Ordinary income rates Passive Gains / Losses From Passive Investments Taxed at Ordinary income rates 1231 Gains / Losses From Sale of Business Assets Gains are treated as Capital Losses are treated as Ordinary Recapture Gain Gain on property previously depreciated  Taxed at 25% rate
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DEPRECIATION RECAPTURE…
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WHAT IS DEPRECIATION  RECAPTURE ? Depreciation recapture  coverts a portion of a  capital  or 1231 gain  to  ordinary  gain Capital      Ordinary Amount reclassified = Accumulated Depreciation = Depreciation  Recapture Recapture potential is entire amount of accumulated depreciation for asset Only matters if the asset is disposed of at a gain!
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