A subsidiary must recognize depreciation recapture income when the subsidiary is liquidated into the parent.

Question

Quizplus · Accepted Answer

Depreciation recapture income is recognized when an asset is sold for more than its book value, not specifically upon the liquidation of a subsidiary into its parent. Liquidation involves settling debts and distributing assets, which may or may not involve selling assets that could lead to depreciation recapture.

A Subsidiary Must Recognize Depreciation Recapture Income When the Subsidiary