Discussion:Depreciation at sale of property
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Discussion Forum Index --> Advanced Tax Questions --> Depreciation at sale of property
Discussion Forum Index --> Tax Questions --> Depreciation at sale of property
| 4 August 2009 | |
| Client sold property (Motel) in 2008. An operating loss of $(53,645) is evidenced as his portion (51%)through this LLC Partnership. This includes depreciation, of $34,945. He also has a capital gain of $270,572 on the sale of this property. My thought is to remove the depreciation thereby decreasing the loss to Sch E and increase the gain to Sch D, thereby reducing his overall tax liability as this would reduce tax paid on ordinary income and increase tax paid, at the lower rate, on long term capital gains. The property was sold September 1, 2008 and depreciation has been calculated through the date of sale. Taxable income on the 1040 approaches $1,000,000.00 with the effective tax rate at just over 18%. Uncertain as to whether an election is available to take or not take depreciation for 2008 within the LLC, Partnership return. MPF | |
| 4 August 2009 | |
| I don't think you have the option.
Depreciation is equal to the amount allowed or allowable - even if you don't take the deduction, the basis of the property should technically still be reduced. This doesn't make sense to me. If the loss is allowed as an offset of ordinary income I don't see the problem. Is the loss not allowed? Also, if you don't take the depreciation wouldn't that reduce your gain? | |
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