Amazing. I couldn't figure out why they were including 1250 in my CPA prep and also said it only applies to buildings bought prior to 1987. Then you put it all together here concisely and talked about unrecaptured 1250. Got it now thanks to you.
As always great content! Is the chronological order that the lookback rule is applied first ,then the 1245/1250 recapture, and finally the hot-potch for 1231?
That's a great question. It possibly may be construed that way, but I would say no. As mentioned in the video Section 1250 was meant to deal with the slowing of depreciable real property that changed under the Tax Reform Act of 1986. And the old accelerated depreciation depreciation on that real property before the Tax Reform Act of 1986 was recovered much faster. Under the TCJA QIP was considered depreciable like real property. However the CARES Act changes that error to make QIP over a faster time period. So it's the opposite of what happened back in the Tax Reform Act of 1986 with the effect of Section 1250. And therefore it's not the same situation and would not apply. Hope that helps!
Can you explain the following rule with an example : The charitable contribution deduction for Sec. 1245 property must be reduced by the amount that would have been recognized as ordinary income if the item had been sold at its fair market value.
Thanks for the post. This is a special rule under the Internal Revenue Code Section 170 charitable contribution deduction specifics. It relies on the Arrowsmith Doctrine which I mention in this video. The idea is that property was depreciated or amortized and provided an ordinary tax deduction through those deduction benefits. If you were to sell that same property, you would have ordinary depreciation recapture up to a certain point under Section 1245. And since you no longer have that 1245 property, this special charitable contribution rule under Section 170 is making sure you "recapture" the benefit you got from those deductions which are ordinary character. Hope that helps!
@@kritikajhawar6183 I would like for discussion of Charitable contribution deductions as they have special rules. This video is about 1245 and 1250 characterization. I also do not have any videos as the specific item is very detailed and I provide videos on the broad themes of tax. Hope that helps!
Your videos are awesome, keep crankin em out!!!!
Amazing. I couldn't figure out why they were including 1250 in my CPA prep and also said it only applies to buildings bought prior to 1987. Then you put it all together here concisely and talked about unrecaptured 1250. Got it now thanks to you.
As always great content! Is the chronological order that the lookback rule is applied first ,then the 1245/1250 recapture, and finally the hot-potch for 1231?
Thanks for the post. Here is the order to consider: 1245/1250 comes first, then 1231 look back rule, then 1231, and unrecaptured 1250 is last.
Couldn't recaptured 1250 now occur now that qualified improvement property in 2019 can apply Section 168(k) under the CARES Act?
That's a great question. It possibly may be construed that way, but I would say no. As mentioned in the video Section 1250 was meant to deal with the slowing of depreciable real property that changed under the Tax Reform Act of 1986. And the old accelerated depreciation depreciation on that real property before the Tax Reform Act of 1986 was recovered much faster. Under the TCJA QIP was considered depreciable like real property. However the CARES Act changes that error to make QIP over a faster time period. So it's the opposite of what happened back in the Tax Reform Act of 1986 with the effect of Section 1250. And therefore it's not the same situation and would not apply. Hope that helps!
@@ExploretheCode Just a tax nerd questions. :-) Love the videos. Could we connect directly? michael@tax-nerd.com
@@MVOhanesian Thank you!!
Can you explain the following rule with an example :
The charitable contribution deduction for Sec. 1245 property must be reduced by the amount that would have been recognized as ordinary income if the item had been sold at its fair market value.
Thanks for the post. This is a special rule under the Internal Revenue Code Section 170 charitable contribution deduction specifics. It relies on the Arrowsmith Doctrine which I mention in this video. The idea is that property was depreciated or amortized and provided an ordinary tax deduction through those deduction benefits. If you were to sell that same property, you would have ordinary depreciation recapture up to a certain point under Section 1245. And since you no longer have that 1245 property, this special charitable contribution rule under Section 170 is making sure you "recapture" the benefit you got from those deductions which are ordinary character. Hope that helps!
Thanks, this was definitely helpful.
Can you please give me an example?
@@kritikajhawar6183 I would like for discussion of Charitable contribution deductions as they have special rules. This video is about 1245 and 1250 characterization. I also do not have any videos as the specific item is very detailed and I provide videos on the broad themes of tax. Hope that helps!
Explore the Internal Revenue Code - No problem. But thank you so much for the help on this topic.
@@kritikajhawar6183 You're welcome!
Well explained. Nice video
Thank you!