Just need to make sure I understand recaptured depreciation properly.
Is it safe to say no capital gains on a property are realized until all depreciation (thusfar) claimed on property is recaptured?
And I suppose it would follow that taxes on gains used in calculation of ATER shall consist first of recaptured dep tax and then cap gains tax, if applicable. Correct?
2nd question about taxes yes. First part…most problems i think you will find that recaptured deprec = accumulated deprec. You get to recapture all of it. In other words, because the IRS allows a taxpayer to deduct the depreciation of an asset from the taxpayer’s ordinary income, the taxpayer has to report any gain from the disposal of the asset (up to the recomputed basis) as ordinary income, not as a capital gain