Question

According to Section 291, corporations are required to recapture what percentage of the difference between the amount that would have been recaptured under Section 1245 and the actual recapture under Section 1250?

a) 20%
b) 25%
c) 50%
d) 75%

Answer 1

Corporations must recapture 20% of the difference between the 1245 and the actual 1250 recapture under Section 291 of the Internal Revenue Code.

Step-by-step explanation:

Under Section 291 of the Internal Revenue Code, corporations are required to recapture 20% of the difference between the amount that would have been recaptured under Section 1245 and the actual recapture under Section 1250. This requirement is part of the tax rules governing depreciation recapture when real property is sold. It specifically affects the taxation of corporations when they sell depreciable real property at a gain where depreciation has been previously claimed.

These rules are a component of the broader corporate income tax system, which has experienced a decline in revenue contributions over time. For instance, revenue from the corporate income tax fell from between 5 and 6 percent of GDP in the early 1950s to 1.3 percent of GDP in 2010. This highlights the changing landscape of corporate taxation and the significance of specific tax provisions like Section 291.