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

Recording of a 110-minute CPE webinar with Q&A


Conducted on Tuesday, August 15, 2017
Recorded event now available


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.

Description

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.

Outline

  1. Depreciation recapture provisions and rules
  2. Recapture against real estate
  3. Recapture against business equipment and other assets
  4. Planning opportunities
    1. Transaction timing opportunities
    2. Transaction structure
    3. Installment sales
    4. Like-kind (Section 1031) exchanges
    5. 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 recharac​​terized 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.

Faculty

Heather Behrend
Norton Rose Fulbright US, New York

Ms. Behrend’s practice focuses on corporate, partnership, personal, private equity and international tax matters. She advises US and multinational clients on a wide variety of US and cross-border tax issues, including advising on the federal income tax consequences of domestic and cross-border mergers and acquisitions, project finance transactions, restructurings and recapitalizations.

Michael Plaks, E.A.
REI Tax Firm, Houston

Mr. Plaks has been in private practice since 1996, providing tax preparation, consulting, and IRS representation services to real estate businesses. He is a national authority on real estate taxation, an Amazon best-selling author, an award-winning speaker, and a frequent presenter for real estate organizations and fellow tax practitioners. Contact him via www.MichaelPlaks.com


EA Credit

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EA Processing $5.00


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Recorded Event

Includes full event recording plus handouts.

Note: Self-study CPE and EA credits are not offered on recorded events.

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Program Materials

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Program Materials

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Customer Reviews

Offered different view points and real life, practical examples.

Angela Chretin

Northrop Grumman

I found the presenters to be very experienced and the Q&A's to be particularly useful.

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American Eagle Outfitters

The program had excellent presenters that were extremely knowledgeable.

Lisa R. Volland

Legacy Professionals

The webinar was fast paced and comprehensive.

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SAP

I thought that the speakers were very knowledgeable and their presentation materials will be good reference guides.

Claudia Del Castillo, CPA

Sol Schwartz & Associates

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Corporate Tax Advisory Board

David Adler

Director of Multistate Tax Services

Deloitte Tax

Silvia Aguirre

Chief Certificate Officer

Avalara

David Bowen

Principal

Grant Thornton

Elizabeth Bowman

Tax Research Analyst

ADP Tax Credit Services

Rick Bregitzer

Manager of Domestic Taxes

Parker–Hannifin

Joseph Calianno

Partner, National Tax Office International Tax

BDO

Patrick Derdenger

Tax Partner

Steptoe & Johnson

Martin Eisenstein

Managing Partner

Brann & Isaacson

John Garippa

Senior Partner

Garippa Lotz & Giannuario

Joseph Geiger, Esq., CPA

Tax Consultant

Vertex

Kenneth Graeber

VP & Management Consultant

Marvin F. Poer & Co.

Don Griswold

Executive Tax Counsel

Berkshire Hathaway Tax Group

Stephanie Anne Lipinski-Galland

Partner

Williams Mullen

George Manousos

Partner

PricewaterhouseCoopers

Diane Matulich

Senior Manager, Local Taxes

Advanced Micro Devices

Betty McIntosh

Senior Managing Director

Cushman & Wakefield

Foy Mitchell

Vice President

Marvin F. Poer & Co.

Richard Pomp

Professor of Tax Law

University of Connecticut

Walter Pickhardt

Partner

Faegre Baker Daniels

Richard J. Prem

Vice President, Indirect Taxes & Tax Reporting

Amazon.com

Michael Press

President

Scout Economics

Tammy Propst

President

taxadvantagegroup

Mark Semerad

Manager of Property Tax

Level 3 Communications

Richard Weiss

Tax Research Manager

ADP Tax Credit Services

Tom Windram

Managing Director & National Leader, Federal Tax Credits & Incentives

RSM McGladrey

Thomas Zaino

Managing Member

Zaino Hall & Farrin

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