UNIVERSITY OF WASHINGTON
Accounting 530
Issues of Property Ownership

PROBLEM #14A - RECAPTURE

READING ASSIGNMENTS:
Code:
	§§ 291(a)(1), 453(i), 1245, 1250        1245(a)(5) *Before amendments by TRA '86*
Regulations:
	1.1245-3(a)(3);  -4(d)(1);  -6(a)
Cases:
	None		
Administrative:
	Cumulative Bulletin Notice 2000-4, I.R.B. 2000-3, (Jan. 04,
2000)
		
PROBLEM ASSIGNMENTS:

1.	Dee Spozer bought a business asset in 1995.  Today, Dee will get rid of the asset in the alternative transactions given below.  The asset was purchased for $100,000 and $60,000 of proper depreciation has been taken on the asset.
	a.	Dee sells the asset for $110,000, straightline depreciation has been taken and,
		1)	it is personalty.			
		2)	it is an office building.
			 
			PL 99-514 §201(d)(11)(D) 
					goes over to 167(j)(2)(B)
3)	it is an apartment house.
4)	Dee is a corporation

             b.	Dee purchased the asset in 1985 sells the asset for $110,000, straightline depreciation would have been $45,000 and,  depreciation taken was declining balance
				1)	it is personalty.
				2)	it is an office building.
				3)	it is an apartment house.
				
	c.	Dee sells the asset for $52,000, in 1985 or 1995, straightline depreciation has been taken and,
		1)	it is personalty.					
		2)	it is an office building.			
		3)	it is an apartment house.

			
d.	Dee sells the asset for $52,000, in 1985 or 1995 straightline depreciation would have been $45,000 
	1)	it is personalty.		
		2)	it is an office building.			
		3)	it is an apartment house.
		
	e.	Dee sells the asset for $33,000, in 1985 or 1995 straightline depreciation would have been $45,000 		and,  
		1)	it is personalty.
		2)	it is an office building.
		3)	it is an apartment house.
	
2.	Advise Dee on the consequences of the following transactions.  Assume the same facts as question # 1.b.1) above.
	a.	Dee makes a gift to her son.  Advise the parties.
	b.	Dee dies and her son inherits.  Advise the parties.
	
3.	Assume the facts of question #1.b.2) above.  Dee will trade the asset for an apartment house of equal value.  Advise the parties.