Question

which of the following statements regarding recapture is true? question 2select one: a. recapture only occurs when there is a positive balance in a class pool and that pool of assets is empty. b. recapture occurs when there is a positive balance in a class pool, even if there are assets remaining in that class pool. c. recapture may be deducted from business income. d. recapture occurs when there is a negative balance in a class pool, even if there are assets remaining in that class pool.

Answer 1

Recapture occurs when there is a positive balance in a class pool, and it can be deducted from business income.

Step-by-step explanation:

The correct statement regarding recapture is option B: recapture occurs when there is a positive balance in a class pool, even if there are assets remaining in that class pool.

Recapture is a tax concept that refers to the process of reclaiming or recovering previously claimed deductions or credits. It is most commonly associated with the depreciation of business assets. When an asset is disposed of or sold, the recapture rules require that any depreciation claimed on the asset must be included as income for tax purposes.

For example, if a business purchased a machine for $10,000 and claimed $2,000 in depreciation deductions over its useful life, and then sold the machine for $6,000, there would be a recapture of $2,000, which would be taxed. This recapture can be deducted from business income, making option C also true.