In article <usHTk.5623$D32.536[at]flpi146.ffdc.sbc.com> ,
Mark Bole <makbo[at]pacbell.net> wrote:
- quote -


OK I guess I do have them reversed. Thanks to both of you.
--


ArtKamlet at a o l dot c o m Columbus OH K2PZH

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Arthur Kamlet wrote:

- quote -

I agree with LoTax, you've got the two switched.

The worksheet in the IRS instructions for Form 1040 Sched. D Line 19 is
titled "Unrecaptured Section 1250 Gain Worksheet" and will apply to the
vast majority of sales of residential rental properties in the current year.

I realize this semantic detail is not very helpful to most taxpayers,
but it is still correct to use the term "Unrecaptured Section 1250 Gain"
for the portion of the gain on a depreciated rental property that is the
lesser of (1) the computed gain or (2) the depreciation claimed (reduced
by any Sec. 1250 recapture of accelerated depreciation, which I agree is
fairly uncommon these days).

-Mark Bole

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

"Arthur Kamlet" <kamlet[at]panix.com> wrote in message
news:gfnbtp$ejv$1[at]reader1.panix.com...
- quote -


ok, I will stop here and digest. And put this away for future reference.
Separating the types of property (1250 vs other) makes much sense (not that
taxes are supposed to make much sense). This is really helpful.

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

In article <A0GTk.29360$_Y1.10294[at]bgtnsc05-news.ops.worldnet.att.net> ,
Gil Faver <rowdy'sboss[at]xxyz.com> wrote:
- quote -

If you sold land, no structure remained at time of sale,
I would agree with you.

100% of the sales price would go to the land, unless perhaps a fence
was added as a 15 yr land improvement, say, and then some allocation
might have to be made.



- quote -


I was looking only at the seller.



The buyer who immediately buys a building and tears it down
to rebuild, will allocate full purchase price to the land and
add more basis to any building later erected.




- quote -


I lost parsing ability a few sentences. I'm not sure where we are
with which 1250 property?


- quote -




Could be. If no gain, then no recapture of depreciation.

- quote -


One more comment to LoTax: I thought I had the unrecatured 1250 and the
1250 recapture right, but I can be convinced they are switched.
--


ArtKamlet at a o l dot c o m Columbus OH K2PZH

--
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- quote -

I certainly like that concept, but I think it is too late . . .

- quote -

so, if the building is demolished before sale, there is no portion of the
sales price attributable to 1250 property, and thus no recapture?

Likewise, if the purchaser promptly tears down the existing structure, the
purchaser is paying only for the land, and thus no recapture?

And, if the 1250 property has a value of not more than its remaining basis,
no recapture?

And, to the extent the 1250 property has REALLY lost value (depreciation
actually has some basis in fact), that will reduce the amount of recapture
that might otherwise occur if the 1250 property maintained its original
value or appreciated?

- quote -

Art, thanks. This discussion has been most enlightening. I hope I remember
it when the time comes. Of course, who knows what the tax laws will be
then.

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- quote -

Art, I think you've got the two "recapture" definitions reversed...
Will you consider this?

And line 22 isn't either of these, best I can recall.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

In article <3wATk.133271$Mh5.57116[at]bgtnsc04-news.ops.worldnet.att.net> ,
Gil Faver <rowdy'sboss[at]xxyz.com> wrote:
- quote -


Don;t make too much work for yeurself here.



As I said a few times, do the allocation by asset class/class life.

So all Section 1250 27.5 yr property should be lumped together
when allocating the portion of sales price atributable to that property.
Old roof/new roof/deck/porch, simply is too fine detail to worry
about.


Sec 1231 property - pimarily the land itself, will have a portion
of the sales price allocated to it.


Sec 1245 is sometimes the pain in the neck nickel & dime stuff, and
if over 5 years it is reasonable to allocate none of the sales price
to Sec 1245 completely depreciated property. Or if it is partially
depreciated, use the remaining adjusted cost basis for all 1245 property
as a good estimate of the sales price allocated to 1245.


I've heard of tax professionals fretting over the FMV of appliances
at time of sale because they know an allocation will have to be made.
I've tried to say here that you can make the 1245 gain to come out
to be zero, using the very reasonable depreciated cost basis as sales
price. Nothing difficult at all.
--


ArtKamlet at a o l dot c o m Columbus OH K2PZH

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

In article <N6tTk.4381$8_3.885[at]flpi147.ffdc.sbc.com> ,
Mark Bole <makbo[at]pacbell.net> wrote:
- quote -


Unrecaptured Sec 1250 gain pretty much no longer exists. That's because
it applies only to the difference between accelerated depreciation
before 1976 and straight line. Since it's more than 31 years and by
now pretty much all such properties are either fully depreciated or
the straight line is at least as much as the accelerated amount, no
one will be finding unrecaptured S 1250 any longer.


Sec 1250 recapture on the other hand it just the portion of gain
on 1250 property attributable to depreciation. the property
could have been owned and depreciated only 5 years for example, and
you will still be recapturing gain due to depreciation on Sec 1250
property.

--


ArtKamlet at a o l dot c o m Columbus OH K2PZH

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

- quote -

I like the concept that it cancels out, but I am not quite following. Of
course, I haven't pulled out the forms and tried to work through them,
either. But, let's say you purchase a property for $1,000,000. Over the
course of time you add a capital improvement (not getting into what a roof
"replacement" involves here!) that costs $20,000. Your basis is now
$1,020,000. You fully depreciate the capital improvement (and the capital
improvement vanishes), so your basis is now $1,000,000. Along the way, you
took other depreciation in the amount of $70,000. Your adjusted basis is
$930,000. You sell the property for $1,500,000. Your gain is $570,000.
But, you have depreciation recapture to take into consideration, so some of
your gain will be treated as recapture, not gain. You will recapture the
$70,000 of the "other depreciation". Will you not also recapture the
$20,000 for the capital improvement? Or are you saying you will allocate
zero of the sales proceeds to this no-longer-existing capital improvement,
and thus there is no recapture for this capital improvement?

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

"D. Stussy" <spam[at]bde-arc.ampr.org> wrote in message
news:gfkqvv$vql$1[at]snarked.org...
- quote -

I disagree that "replacement" implies anything. Talk to roofers, talk to
property managers, talk to owners, and "replacement" can mean anything.
Best not to "assume".

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

LoTax wrote:
- quote -

You're asking the wrong question. It's not about recapture, it's about
taxation of previously unrecaptured amounts.

-Mark Bole

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Nov 14, 4:51�pm, kam...[at]panix.com (Arthur Kamlet) wrote:
- quote -

Seems to me that line 22 is simply any depreciation that's been
allowed or allowable, and that it pretty much *always* reduces basis,
which is the only thing line 22 is about.

"Recapture" just *has to be* something else... :-O

Has this entire thread been about whether or not depreciation reduces
basis...???

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

"Gil Faver" <rowdy'sboss[at]xxyz.com> wrote in message
news:wEkTk.28017$_Y1.12225[at]bgtnsc05-news.ops.worldnet.att.net...
- quote -

That case did not involve removing the existing roof in its entirety.
"Replacement" implies removal of the old.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

"Arthur Kamlet" <kamlet[at]panix.com> wrote in message
news:gfkjj3$8qr$1[at]reader1.panix.com...
- quote -

However, paving over a roof with a new layer of materials is an expense - a
2003 Tax Court decision (I think that's the year of it).

- quote -

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

In article <834a3761-3cfd-43d6-83ba-197fe799cde9[at]k24g2000pri.googlegroups.com> ,
LoTax <lotax[at]hotmail.com> wrote:
- quote -


Form 4797 line 22 :^)
--


ArtKamlet at a o l dot c o m Columbus OH K2PZH

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

In article <dtprh4t84r0ua98geipv7gghj8qsofgs6p[at]4ax.com> ,
David <dfouste[at]newsguy.com> wrote:
- quote -


If you sell property for, say, $300,000, yopu have to allocate that
among each asset class.


The building and capital improvements to the building would be an
asset class. The land another. The small stuff, appliances, another.


You would not need to or benefit much from fine tuning the sales
price allocation within each class. But you can, though at the
end of the day you need a major chunk of that 300,000 allocated
to the building and its improvements. Land would cover just about
all the rest.


So you need a reasonable method to allocate sales price, and when you
are done, the allocated sales prices add up to the actual sales price.
--


ArtKamlet at a o l dot c o m Columbus OH K2PZH

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Would someone please define "recapture", in the context it's being
used in this thread...?

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Fri, 14 Nov 2008 14:29:42 EST, kamlet[at]panix.com (Arthur Kamlet)
wrote:

- quote -

So you seem to be saying that there will not need to be a recapture on
a five year depreciated appliance as it is declining in value as rapid
as one takes the depreciation. So can the same case be made in regards
to roofing and wood fencing as there normal life is no more than the
27.5 and 15 years respectively. Here in the northwest wood fences are
almost always rotted and falling down by fifteen years and I have yet
to get 27.5 years from an asphalt roof and many are only rated for 25
which here rarely last the expected life. So it seems there would not
be any allocation at the time of sale as the actual roof and fencing
are truly depreciating in value as rapidly as one takes the
depreciation.


David

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

In article <wEkTk.28017$_Y1.12225[at]bgtnsc05-news.ops.worldnet.att.net> ,
Gil Faver <rowdy'sboss[at]xxyz.com> wrote:
- quote -




That's what makes life interesting.




- quote -


It cancels out.

The recaptured depreciation goes to reduce basis. But when the old
new roof got added, the basis of the property increased.


So if you paid $20,000 for the old new roof, and it's been
depreciated fully, your Sec 1250 property basis has been increased
along the way by $20,000 and through depreciation recapture
its basis will now be reduced by 20,000 and all the paperwork and
asset schedules balance and are accounted for.



But yes, I like to have all the ducks lined up and accounted for,
so I would not let the old new roof fly away.
--


ArtKamlet at a o l dot c o m Columbus OH K2PZH

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

"Arthur Kamlet" <kamlet[at]panix.com> wrote in message
news:gfkjj3$8qr$1[at]reader1.panix.com...
- quote -

wow, are you kidding? There has been much discussion on this point here on
MTM, with tax court decisions cited.

- quote -

Let me ask it this way. I own a property, and I do a roof replacement that
is so extensive that it needs to be depreciated, not expensed. I own the
building long enough that the depreciation is fully realized, and then I
perform another roof replacement. I then sell the property. Do I need to
recapture the depreciation for the first, fully used up roof? That section
1250 property no longer exists, and is not part of the sale. No part of the
gain can possibly be attributed to the first roof.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >