Depreciation recapture provisions
I.are reclassification provisions.
II.apply to depreciable assets sold at a gain.

A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question

Depreciation recapture provisions
I.are reclassification provisions.
II.apply to depreciable assets sold at a gain.
​
A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Quizplus · Accepted Answer

Depreciation recapture provisions are indeed reclassification provisions that require the portion of the gain attributable to depreciation to be taxed as ordinary income rather than capital gain. They apply specifically to depreciable assets that are sold at a gain, ensuring that the tax benefits received from depreciation are effectively "recaptured" by the IRS at ordinary income rates.

Depreciation Recapture Provisions I.are Reclassification Provisions