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Recapture of Special Depreciation Allowance When you sell

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Recapture of Special Depreciation Allowance When...
Recapture of Special Depreciation Allowance

When you sell an asset in which you took the Special Depreciation Allowance before the end of it's useful life, do you have to recapture the SDA? For example, if I paid $1000 for a desk, and took $500 SDA when placed in service, then sold it two years later, you would I have to recapture the SDA? I've already read Pub 946 and the instruction for 4562, but I am still a little unclear. Can someone explain this to me in layman's terms? Thanks!
Submitted: 6 years ago.Category: Tax
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Answered in 17 minutes by:
9/3/2011
Tax Professional: MequonCPA, Certified Public Accountant (CPA) replied 6 years ago
MequonCPA
MequonCPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 2,342
Experience: CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.
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Hi and welcome to JustAnswer:

When you sell the property you do recapture the bonus depreciation.

The depreciation will only be recaptured if there is a gain on the sale.

Ex: Purchase price, $1,000, bonus depreciation $500, regular depreciation $150, selling price $600. Basis is $350 ($1,000 - $500 - $150). Gain is $250 thus this amount of gain is taxed at ordinary income tax rates.
MequonCPA
MequonCPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 2,342
Experience: CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.
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