If an asset is sold for more than its initial purchase price, the gain on the sale is composed of two parts: a capital gain and recaptured depreciation.

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When an asset is sold for more than its initial purchase price, the gain on the sale is composed of two parts: a capital gain and recaptured depreciation. The capital gain is the difference between the sale price and the purchase price, and the recaptured depreciation is the amount of depreciation that was claimed as a tax deduction during the time the asset was owned.

If an Asset Is Sold for More Than Its Initial