Recapture Basics
Gain on selling equipment, up to the depreciation you took, is taxed as this.
Ordinary Income
The maximum tax rate on unrecaptured §1250 gain.
25%
Under §1239, gain on depreciable property sold to a related person is taxed as this.
ordinary income
Of §1245 and §1250, the one that covers personal property like machinery and vehicles.
§1245
Unrecaptured §1250 gain is capped at the lesser of the total gain or this amount.
depreciation taken
To be a controlled corporation, you must own more than this percentage of its stock value.
>50%
Land is never subject to depreciation recapture because it is not this.
depreciable
Sales of business property like a rental building are first reported on this IRS form.
Form 4797
Sam owns 40% of a corporation and his wife owns 15%. Does §1239 apply on his sale of a building to it?
yes (Her 15% is attributed to him, so he is treated as owning 55%.)
In this context, §1250 property generally means this type of property.
Real Property (buildings
If your ordinary rate is only 12%, the 25% acts as this, not a flat rate.
a ceiling (a maximum)
You sell land to your wholly owned corporation. Does §1239 apply?
no