Q. Did I do something wrong or is that the way it is done?
A. That's the way it's done.
It's a little misleading/confusing. Depreciation recapture is classified as a section 1250 capital gain. Despite the capital gain terminology, it is taxed as ordinary income , but not more than 25% Since it's a capital gain, it's included in the gain on line 11 of Schedule D. But because it's taxed differently it also goes on line 19 of Schedule D. See the schedule D tax worksheet for tax calculations.
