Depreciation Recapture CPA Exam TCP
Learn the Depreciation Recapture CPA Exam TCP rule, work one CPA Exam example, avoid the common trap, and continue with free TCP questions.
The decision that earns the point
The Depreciation Recapture CPA Exam TCP decision
Depreciation recapture recharacterizes part of gain on a qualifying asset disposition based on prior depreciation and the applicable property rule. Compute total realized and recognized gain first, identify the asset category, then determine the ordinary-income recapture and any remaining gain character.
Exam use
TCP can test Section 1245, Section 1250, unrecaptured Section 1250 gain, installment interactions, and business-property netting.
Your scratch-paper plan
Solve it in three moves
- 1
Compute total gain
Determine amount realized, adjusted basis, and recognized gain before classifying any portion.
- 2
Identify the property rule
Classify the asset and apply the recapture ceiling tied to depreciation or the statutory limitation in the facts.
- 3
Characterize the remainder
Separate ordinary recapture from remaining business-property or capital treatment and apply later netting if required.
Worked problem
Work the facts before choosing the answer
Section 1245 equipment costs $100,000, has $70,000 accumulated depreciation, and sells for $85,000 with no other disposition costs.
Show the work
Adjusted basis is $30,000 and gain is $55,000. Prior depreciation of $70,000 exceeds the gain.
Answer
All $55,000 gain is ordinary Section 1245 recapture under the simplified facts because gain does not exceed prior depreciation.
Do it now
Test the same decision with a fresh question
Start with free TCP practice. Create an account only when you want the 5-day no-card CPAPass trial and continued section practice.
The trap and the repair
Common trap
Calling the sale proceeds recapture ignores adjusted basis and total gain. Applying Section 1245 mechanics to every depreciable building also skips property classification.
Repair
Compute gain, classify the asset, apply the recapture limit, and only then characterize what remains.
Your exam workflow
- Step 1Read the requirementIdentify what the task asks you to decide about depreciation recapture cpa exam tcp.
- Step 2Sort the factsDetermine amount realized, adjusted basis, and recognized gain before classifying any portion.
- Step 3Apply the ruleClassify the asset and apply the recapture ceiling tied to depreciation or the statutory limitation in the facts.
- Step 4Check the outputSeparate ordinary recapture from remaining business-property or capital treatment and apply later netting if required.
Keep the next step narrow
Quick questions
What is the shortest useful answer for depreciation recapture cpa exam tcp?
Depreciation recapture recharacterizes part of gain on a qualifying asset disposition based on prior depreciation and the applicable property rule. Compute total realized and recognized gain first, identify the asset category, then determine the ordinary-income recapture and any remaining gain character.
How can depreciation recapture cpa exam tcp appear on the CPA Exam?
TCP can test Section 1245, Section 1250, unrecaptured Section 1250 gain, installment interactions, and business-property netting. The exact task can change, so identify the governing facts before applying the rule.
What is the most common mistake with depreciation recapture cpa exam tcp?
Calling the sale proceeds recapture ignores adjusted basis and total gain. Applying Section 1245 mechanics to every depreciable building also skips property classification. Compute gain, classify the asset, apply the recapture limit, and only then characterize what remains.
Where should I practice depreciation recapture cpa exam tcp?
Use /free-practice/tcp for section-aligned practice, then review /learn/tcp-installment-sales when the miss comes from an adjacent rule rather than this topic itself.