If a taxpayer had previously taken an investment credit on qualified property, and later, before the end of its recovery period, gave it to her daughter, there will be a recapture of investment credit on the original property.

Question

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According to the tax code, if qualified property on which the investment credit was taken is disposed of before the end of the recovery period, or if the property ceases to be used in a qualified manner, there will be a recapture of investment credit. In the scenario described, giving the property to the taxpayer's daughter would count as disposal or ceasing to use the property in a qualified manner. Therefore, there would be a recapture of investment credit.

If a Taxpayer Had Previously Taken an Investment Credit on Qualified