The National Directory of Certified Public Accountants

Ask A CPA - Sale of Business Property

Depreciable Real Property - Section 1250 - Form 4797

Generally, depreciable Real Property sold at a gain is considered either Section 1231 if depreciated post 1987or Section 1250 property if depreciated pre 1987 and reported on Form 4797 Bonus depreciation taken in years 2008 through the present year must be picked up as ordinary income Gain attributable to depreciation pre 1987 is subject to recapture as ordinary income unless straight line method was used.. Gain on the disposition of Section 1250 property is treated as ordinary income to the extent of additional depreciation allowed or allowable on the property. Depreciable Residential Rental Property sold at a loss is considered Section 1250 property reported on Form 4797 Part 1 if long term, and 4797 part 2 if short term.

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