Question

Code § 1245 recapture applies to the following:

(a) The sale of depreciable personal property
(b) The disposition of certain stock options
(c) The sale of land at a gain
(d) The receipt of a gift

Answer 1

Correct choice would be (A) Section 1245 of the Internal Revenue Code pertains specifically to the recapture of depreciation when certain types of depreciable personal property are sold or disposed of at a gain. This section ensures that any gain attributable to depreciation previously claimed on such property is recaptured and taxed as ordinary income up to the extent of the depreciation allowed or allowable.

Answer 2

Code § 1245 recapture is a provision in the U.S. Internal Revenue Code that applies to the recapture of certain tax benefits when certain depreciable personal property is sold.

Step-by-step explanation:

The subject of this question is Business in the context of tax laws and regulations. Code § 1245 recapture is a provision in the U.S. Internal Revenue Code that applies to the recapture of certain tax benefits when certain depreciable personal property is sold.

The correct option in this case would be (a) The sale of depreciable personal property. The recapture rule applies when property, such as machinery, equipment, or vehicles, that has been previously depreciated is sold at a gain.

For example, if a business sells a machine that was previously depreciated and realizes a gain on the sale, the Code § 1245 recapture could require the business to recognize a portion of that gain as ordinary income instead of capital gain.