Why Does §1250 Recapture Generally No Longer Apply

question 27

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• A) Congress repealed the code section.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 these.

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Definitions:

Times Interest Earned Ratio

A financial metric assessing a company's ability to meet its interest obligations from operating earnings.

Inventory Turnover

A measure of how quickly a company sells its stock of goods in a period, calculated by dividing the cost of goods sold by the average inventory level.

Equity Multiplier

A financial leverage ratio that measures the portion of a company's assets that are financed by shareholders' equity.

Debt-to-equity Ratio

The ratio that demonstrates the comparative financing from shareholders' equity and debt for a company's assets.