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

A live 110-minute CPE webinar with interactive Q&A


Tuesday, August 15, 2017
1:00pm-2:50pm EDT, 10:00am-11:50am PDT


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


Registration per Person for Live Event

Live Webinar $247.00

Live Webinar & CPE Processing $282.00


CPE per Person on Live Event

Continuing Professional Education credit processing is available for an additional fee. CPE processing must be ordered prior to the event. To qualify for CPE you may not listen via the telephone.

This program is eligible for 2.0 CPE credits.

  • Field of Study: Taxes.
  • Level of Knowledge: Intermediate.
  • Advance Preparation: None.
  • Teaching Method: Seminar/Lecture.
  • Delivery Method: Group-Internet (via computer).
  • Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of verification codes announced throughout the presentation.
  • Prerequisite: Three years plus business or public firm experience at mid-level within the organization, preparing complex tax forms and schedules, supervising other preparers/accountants. Specific knowledge and understanding of depreciation recapture rules, the technical calculations and planning opportunities of the recapture provisions; familiarity with IRC Sections 1245 and 1250, which set out the rules for recapture based on various types of assets.

NOTE: CPE credit processing for all attendees must be ordered by 2pm Eastern the day of the program to receive a Certificate of Attendance within 24 hours.


Recordings

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Includes full event recording plus handouts (available after live webinar).

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