Imagine this: You buy a new business car and gift your old business car to your daughter. This gift of the old car to your daughter triggers the recapture rules and they tag you with a $10,000 recapture tax.
Because you are in business, you need to know and beware of the recapture rules. A simple thing like gifting your business car to your child triggers a minefield of potential tax problems.
This article focuses on the recapture and loss-destruction rules that apply to gifts of personal property, such as giving your business car to your daughter. Over the past 20 years, lawmakers have applied layers of recapture rules to the loss-destruction rules, all designed to complicate your taxes and take tax money from you.
When you make gifts of personal property, such as gifts of cars and furniture, you need to consider three types of recapture:
1.
Depreciation recapture
2.
Section 179 expensing recapture
3.
Section 280F business-use recapture
When a gift triggers recapture, something happens, either to you or to the gift recipient. Happenings can be tragic, but not with no-problem gifts.
In addition to recapture, gifts can cause you to lose a deductible tax loss. Once we finish with recapture, we will explain how ... Log in to view full article.
