Depreciation recapture in tax-free transactions

Article Abstract:

The increased difference in tax treatment between capital gains and ordinary income in the Taxpayer Relief Act of 1997 necessitates greater scrutiny of transactions involving IRC sections 1245 or 1250 depreciation recapture. Normal tax-free or deferral producing provisions can result in recognition of income or additional income in the cases of involuntary conversions and like-kind exchanges. Transactions between corporations and partnerships can result in recognition of ordinary income rather than capital gains.

United States, Laws, regulations and rules, Recognition of gain or loss (Taxation), Recognized gain or loss (Taxation), Tax-free exchanges, Depreciation, Recapture (Taxation)

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Has the Supreme Court's decision in Soliman resolved the home office controversy?

Article Abstract:

Further clarification will be needed on tax deductions for home offices even though the US Supreme Court created guidelines in Soliman v. Commissioner. The Court instituted a facts-and-circumstances test to replace the focal point test for determination of the validity of home office deduction claims. However, the application of the Court's guidelines is still uncertain due to the need for comparative analyses of time spent at differing work sites.

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Factual glitches affect viability of home office deductions after Soliman

Article Abstract:

Tax deductions for a home office will be more difficult after Commissioner v. Soliman. That decision made use of two tests for deductibility: amount of time spent and relative importance of the work. Audits will be harsher, and alternative strategies may be needed. Such strategies include a separate home business or separate home structure for use.

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