Which of the following is true regarding depreciation recapture?
A) Changes the character of a loss.
B) Changes the character of a gain.
C) Changes the amount of a gain.
D) Only applies to ordinary assets.
E) None of these.

Question

Quizplus · Accepted Answer

Depreciation recapture changes the character of a gain, turning it from a capital gain to ordinary income, which is taxed at higher rates. This applies to assets that are subject to depreciation deductions, such as real estate or equipment. Therefore, options A, C, and D are incorrect. Option E is also incorrect as one of the statements was true.

Which of the Following Is True Regarding Depreciation Recapture