Identify which of the following statements is true.
A)The transferor must recapture depreciation when exchanging Sec. 1245 property in all transactions coming under Sec. 351.
B)A corporation receiving property in a Sec. 351 exchange can select any MACRS depreciation method for the asset.
C)When depreciable property is transferred to a corporation in a Sec. 351 exchange in which no gain is recognized, the corporation must continue to use the transferor's depreciation method and recovery period for the property.
D)All of the above are false.

Question

Quizplus · Accepted Answer

When depreciable property is transferred to a corporation in a Sec. 351 exchange in which no gain is recognized, the corporation must continue to use the transferor's depreciation method and recovery period for the property. The other statements are false. The transferor does not have to recapture depreciation when exchanging Sec. 1245 property in a Sec. 351 exchange, and the corporation receiving property in a Sec. 351 exchange must continue to use the transferor's depreciation method and recovery period unless certain conditions are met to allow for a change in method.

Identify Which of the Following Statements Is True