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Calculating Depreciation Recapture Under IRC 1245 And 1250: Minimizing Tax Through Transaction Planning

Webinar: ID# 1026210
Recorded CD or On-Demand
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About This Course:
This webinar will provide a deep and detailed explanation of depreciation recapture rules, focusing on the technical calculations and planning opportunities of the recapture provisions. The speakers will explore IRC 1245 and 1250, which set out the rules for recapture based on various types of assets.

Depreciation recapture is the IRS process of recharacterizing tax on a gain that had previously provided a deduction against ordinary income. Business taxpayers experience unexpected income tax liabilities by failing to account for depreciation recapture provisions when selling capital assets.

Depreciation recapture under IRC Sections 1245 and 1250 applies to sales of depreciable real estate, business tangible personal property, even the sale of a business. Tax advisers need to understand the recapture rules, and to be able to advise decision makers of the tax effects of depreciation recapture on gains from asset sales, to understand the tax consequences of the sale of capital assets.

By carefully considering the recapture rules, tax advisers can reduce the negative impact of depreciation recapture through forward planning. In any tax-reduction scenario, proper calculation of the recapture provisions is critical to minimizing taxes on capital asset sale gains through timing of transactions.

Listen as our experienced panel provides a deep and practical exploration into the depreciation recapture rules of Sections 1245 and 1250, providing best practices for calculating depreciation recapture effects as a planning tool for avoiding tax.

Course Outline
  • Depreciation recapture provisions and rules
  • Recapture against real estate
  • Recapture against business equipment and other assets
  • Planning opportunities
    • Transaction timing opportunities
    • Transaction structure
    • Installment sales
    • Like-kind (Section 1031) exchanges
    • Component allocations
Benefits

The panel will address these and other key issues:
  • Applicable depreciation recapture rules for Sections 1245 and 1250
  • Distinction between depreciation recapture and unrecaptured Section 1250 gains
  • Preparing calculations and estimates of recapture gains recharacterized as ordinary income or Section 1250 gains
  • Planning opportunities to manage and reduce the tax arising from recapture
  • Differences in treatment between structuring a business disposition as a stock sale vs. an asset sale
Learning Objectives

After completing this course, you will be able to:
  • Identify the applicable depreciation recapture rules for Sections 1245 and 1250.
  • Decide how to prepare calculations and estimates of recapture gains recharacterized as ordinary income.
  • Determine duties to assess risk of material misstatement due to fraud.
  • Establish planning opportunities to reduce the tax arising from recapture. Distinguish between the differences in treatment between structuring a business disposition as a stock sale vs. an asset sale.
How To Access Course And Materials

Handout materials and the phone number for live presentations are made available to you one day prior to the event via email from the presenter. Copies of the presentations are included with recorded versions.

If you order a recorded version of the webinar, CDs will be mailed out approximately 10 days after the live event. Shipping is included in the price of recorded versions.

Continuing Education Credits Available

This program has been approved for 2.0 CPE hours through Strafford Publications. To obtain CPE credit, attendees must participate in the live event (recorded versions do not qualify for credit), return an Official Record of Attendance to Strafford affirming their participation (including the CPE code announced during the program), and pay a processing fee of $35 per person.

Strafford will mail a certificate of credit within approximately two weeks of receiving your completed Official Record of Attendance, provided all required conditions have been satisfied.

Strafford is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit.
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Calculating Depreciation Recapture Under IRC 1245 And 1250: Minimizing Tax Through Transaction Planning
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