Which of the following is true regarding depreciation recapture?
A)Changes the character of a loss.
B)Changes the character of a gain.
C)Changes the amount of a gain.
D)Only applies to ordinary assets.
E)None of the choices are correct.

Question

Quizplus · Accepted Answer

Depreciation recapture is a tax provision that applies when the sale price of a property, such as an asset or real estate, exceeds its tax basis. This excess amount is considered a gain, and depreciation recapture changes the character of that gain from capital gain to ordinary income. Therefore, option B is correct, as it changes the character of a gain.

Which of the Following Is True Regarding Depreciation Recapture