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not otherwise treated as ordinary income. Pursuant to section
6024 of the 1998 Act, 112 Stat. 826, the amendment to the
definition took effect as if included in the 1997 Act.
Therefore, for the 1997 tax year, if long-term capital gain is
subject to section 1250, the section 1250 gain is recaptured at
ordinary income tax rates, and the remaining depreciation claimed
is unrecaptured section 1250 gain taxed at the 25-percent rate.
Here, the parties have stipulated that none of the long-term
capital gain attributable to depreciation claimed on the
investment property is section 1250 gain recaptured at ordinary
income tax rates. Petitioners reduced their basis in the
property by $59,1884 of depreciation claimed over a 20-year
period. On Schedule D, petitioners reported only $27,159 of the
total depreciation claimed as unrecaptured section 1250 gain.
Therefore, the remaining $32,029 of depreciation claimed is
subject to the section 1250 gain rules and the unrecaptured
section 1250 gain rules. However, since the parties have
stipulated that none of the $59,188 of depreciation is to be
recaptured as ordinary income under section 1250, the entire
$59,188 is considered unrecaptured section 1250 gain.
4 This amount is rounded to the nearest dollar.
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Last modified: May 25, 2011