@AmeliesUncle wrote:
For example, a taxpayer buys a $10,000 widget (§1245 property) and uses 100% bonus depreciation. Then 366 days later, he sells it. All gain would be recaptured at ordinary rates. If the depreciation is not gifted, he could then gift it to his son.....
We could formulate examples all day long without any resolution and some that either defy logic or otherwise allow a taxpayer to take advantage of a certain transaction.
How about this one (if the depreciation would follow the gift)?:
Dad owns rental real estate that is fully depreciated and gifts the entire property to his son. If depreciation is "gifted", then it would be quite advantageous for both parties if the son is in the 12% tax bracket while Dad is in 37%. Nice income shift there, is it not?
Regardless, there has to be a distinction made between basis for the purposes of a sale and basis for the purposes of depreciation (and this thread was started because @fulleral needed assistance with the latter, not the former).
