Article Date:
September 2016

Word Count:



Beware When Gifting Business Property

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 the IRS tags 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 can trigger a tax siphon that sucks out your tax benefits.


This article focuses on the recapture (additional taxes) and lost deductions rules that you can trigger when you gift personal property that you used in your business, such as giving your business car to your daughter.


Problem 1: Recapture (Additional Taxes)


When you make gifts of personal property, such as gifts of cars and furniture, you need to consider three types of recapture:



Depreciation recapture


Section 179 expensing recapture


Section 280F business-use recapture


When your gift triggers recapture, something happens, generally to you but in divorce it could happen to your ex. Happenings can be tragic, but not with no-problem gifts.


Before getting to the “no-problem gifts,” remember the second problem: Gifts can cause you to lose a deductible tax loss. Once we finish with how to deal with recapture, we will explain how the loss-destruction rules work and what to do about them. ... Log in to view full article.

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