In case of an existing asset which is depreciable and is used in business and is sold for a price equal to its initial purchase price, the difference between the sales price and its book value is considered as recaptured depreciation and will be taxed as ordinary income.

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When a depreciable asset used in business is sold for a price equal to its initial purchase price, the difference between the sales price and its book value (which would be lower due to depreciation) is considered recaptured depreciation. This amount is taxed as ordinary income, reflecting the reversal of the depreciation deductions previously taken on the asset.

In Case of an Existing Asset Which Is Depreciable and Is