Recapture calculated on disposition with gain

When an asset is disposed of, you'll need to recapture the amount of allowed depreciation as ordinary income. The entire disposition is outlined on Form 4797, Page 2. The total gain is broken down into ordinary income and capital gain as follows:
  • Depreciation allowed is the amount that needs to be recaptured as ordinary income and is reported on Form 4797, Part II. This amount is also added to Form 1040, Line 14.
  • Any remainder amount is the Cost/Basis minus Depreciation allowed. This is classified as a capital gain and is reported on Schedule D.

error-icon

Triva isn't available right now.

Check out the support page for our phone number and hours

error-close