Which of the Following Statements About Section 1250 Recapture Rule

question 109

Multiple Choice

Which of the following statements about Section 1250 recapture rule is false?

• A) The rule applies to sales of depreciable realty by noncorporate taxpayers but not to sales by corporate taxpayers.
• B) The rule applies only to sales of depreciable realty placed in service before 1987.
• C) The rule applies only to sales of depreciable realty for which an accelerated tax depreciation method was used.
• D) The rule has no effect on the characterization of gain recognized on sale of any realty with a zero tax basis.

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Definitions:

Socializing Losses

A scenario where financial losses are distributed across society, typically through government intervention, rather than being borne solely by the entity that incurred them.

Government Loan Guarantees

Programs where the government promises to repay a loan in case the borrower defaults, typically used to encourage lending to certain sectors or projects.

Privatizing Gains

Privatizing gains involves the process of shifting profits and benefits from the public sector to private entities, highlighting a move towards more privatized economic activities.

Debt Crisis

An economic crisis in which government debt has risen so high that the government is unable to borrow any more money due to people losing faith in the government’s ability to repay. Leads to either massive spending cuts or large tax increases, either of which will likely plunge the economy into a recession.