Why Does §1250 Recapture Generally No Longer Apply

question 38

Multiple Choice

Why does §1250 recapture generally no longer apply?

• A) Congress repealed the code section.
• B) The Tax Reform Act of 1986 changed the depreciation of real property to the straight-line method.
• C) §1245 recapture trumps §1250 recapture.
• D) Because unrecaptured §1250 gains now apply to all taxpayers instead.
• E) None of the choices are correct.

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Definitions:

Absorption Costing

A costing technique that incorporates every element of manufacturing expenditure, such as direct materials, direct labor, along with variable and fixed manufacturing overheads, into the pricing of a product.

Product Unit Cost

The total cost associated with producing a single unit of a product, including direct and indirect costs.

Direct Labor

Labor costs directly tied to the production of goods or services, such as wages of workers on the assembly line.

Direct Materials

Raw materials that can be directly associated with the production of goods, forming a significant part of the finished product.