A small business sold an equipment for $100,000 after depreciating the equipment using SOYD depreciation method. The federal tax liability on this depreciation recapture is $34,000 if the company also had other taxable income of $150,000 in that year.

Question

Quizplus · Accepted Answer

The federal tax liability on depreciation recapture depends on the recapture rate, which is typically 25% for real property. The $34,000 tax liability seems incorrect without knowing the specific recapture rate and the amount of depreciation taken.

A Small Business Sold an Equipment for $100,000 After Depreciating