Several years ago,Tom purchased a structure for $150,000 that was originally placed in service in 1929.Three and one-half years ago he incurred qualifying rehabilitation expenditures of $300,000.In the current year,Tom sold the property in a taxable transaction.Calculate the amount of the recapture of the tax credit for rehabilitation expenditures.

Question

Quizplus · Accepted Answer

The recapture amount is 20% of the rehabilitation credit if the property is disposed of within 5 years. The rehabilitation credit is 20% of $300,000, which is $60,000. Since the property was sold after 3.5 years, the recapture is 20% of $60,000, which is $12,000.

Several Years Ago,Tom Purchased a Structure for $150,000 That Was