a. Factory buildingb. Apartment buildingRecapture Rules in Other EventsThere are special rules with respect to the recapture rules for different types of events.¶12,901 GIFTS AND INHERITANCESGifts do not trigger recapture to the donor, but the recapture potential carries over to the donee. Code Secs. 1245(b)(1) and 1250(d)(1); Reg. §§1.1245-4(a) and 1.1250-3(a). Thus, when the donee disposes of the property, the donee must take into account the donor’s depreciation deductions that are subject to recapture in addition to his or her own depreciation if it is depreciable property to the donee. If it is not depreciable property to the donee (e.g., personal-use property), the recapture potential from the donor still carries over.EXAMPLE 12.67 Clara Cranberry gives a gift of Section 1245 property to her son David. The adjusted basis of the property at the time of the gift is $5,000 and the amount of recapture potential is $6,000. David takes $2,000 depreciation on the property before he sells it for $12,000. There is no recapture for Clara, the donor. The gain realized and recognized by David is $9,000 ($12,000 less $3,000 basis), of which $8,000 is recaptured as ordinary income ($6,000 recapture from Clara and $2,000 recapture from the time that David owned it). The remaining $1,000 is Section 1231 gain.When property is transferred at death, both the decedent and the heir escape recapture. Code Secs. 1245(b)(2) and 1250(d)(2).¶12,915 LIKE-KIND EXCHANGES AND INVOLUNTARY CONVERSIONSGenerally, a like-kind exchange does not result in income recognition under Section 1031. However, gain may be recognized if boot is received. Such gain is ordinary income if subject to recapture under Sections 1245 and 1250 and the 25 percent rate recapture under the 1997 Act.EXAMPLE 12.68 Herbert Hughes has a machine (Section 1245 property) with an adjusted basis of $6,000 (fair market value of $10,000), originally costing $15,000 when purchased in 2007. In 2013, he exchanges it for another machine with a fair market value of $8,000 and receives cash of $2,000. Herbert’s realized gain is $4,000 (amount realized of $10,000 ($8,000 + $2,000) less basis of $6,000). The recapture potential is $9,000, to the extent of the total depreciation taken, but since the recognized gain is $2,000 (to the extent of boot received), only $2,000 is recognized and it will be ordinary income. The remaining $7,000 recapture potential carries over to the new machine.EXAMPLE 12.69 If Herbert in Example 12.68had received a machine with a fair market value of $10,000 and no cash, he would still have a realized gain of $4,000, but he would have no recognition of gain because no boot was received. The total $9,000 recapture potential carries over to the new machine.