Assume a Building Is Subject to § 1250 Depreciation Recapture

question 48

Multiple Choice

Assume a building is subject to § 1250 depreciation recapture because § 168(k) was used to depreciate it.The building is destroyed in a hurricane and this is the taxpayer's only casualty or theft for the year.In which of the following situations could there be a § 1250 depreciation recapture gain?

• A)There is a loss because the insurance recovery is less than the adjusted basis.
• B)There is a gain because the insurance recovery exceeds the adjusted basis.
• C)Because of the length of time the building has been held,there is no remaining additional depreciation.
• D)There is no insurance recovery and the adjusted basis of the building is greater than zero.
• E)None of these.

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Definitions:

Crowded

A situation or place where there is a high density of people or objects in a given area.

Predicate

The component of a sentence or an equation that expresses what is said about the subject, often involving a verb or relationship indicating properties or actions.

Proposition

An assertion that conveys a judgment or viewpoint.

Relativity

A theory in physics, formulated by Albert Einstein, that describes the interrelation of space, time, and gravitation, indicating how they are perceived differently depending on the observer's motion.