Which of the following statements regarding recapture is correct?
A)Recapture occurs when there is a negative UCC balance in a class at the end of the taxation year, even if there are assets remaining in the class.
B)Recapture is deductible in the calculation of business income.
C)Recapture occurs when there is a positive UCC balance in a class and there are no assets in the class.
D)Recapture occurs when there is a positive UCC balance in a class at the end of the taxation year, even if there are assets remaining in the class.

Question

Quizplus · Accepted Answer

Recapture occurs when the UCC balance of a class is reduced below zero at the end of a taxation year due to dispositions or other events. This recaptured amount is added to the taxpayer's income for that year. It is possible to have a negative UCC balance even if there are assets remaining in the class, making option A the correct statement. Option B is incorrect because recapture is not deductible but rather increases taxable income. Option C is incorrect because recapture occurs when there is a positive UCC balance, not when there are no assets in the class. Option D is also incorrect for the same reason as Option C.

Which of the Following Statements Regarding Recapture Is Correct