Which of the following statements is correct?
A)When depreciable property is gifted to another individual taxpayer, the depreciation recapture potential is extinguished.
B)When depreciable property is inherited by a taxpayer, the depreciation recapture potential is extinguished.
C)When corporate depreciable property is distributed as a dividend, the depreciation recapture potential is generally not recognized.
D)When depreciable property is contributed to charity, the depreciation recapture potential has no effect on the amount of the charitable contribution deduction.
E)All of these are correct.

Question

Quizplus · Accepted Answer

When depreciable property is inherited by a taxpayer, the depreciation recapture potential is extinguished. This is because the basis of inherited property is stepped up to its fair market value at the date of the decedent's death, thereby eliminating any potential for depreciation recapture for the heir.

Which of the Following Statements Is Correct