There are two types of recapture. The first occurs when listed property usage drops below 50% usage and there was a Section 179 or Special Depreciation taken.
Business-use requirement. If
the property is not used predominantly (more than 50%) for qualified business
use, you cannot claim the section 179 deduction or a special depreciation
allowance. In addition, you must figure any depreciation deduction under the
Modified Accelerated Cost Recovery System (MACRS) using the straight line
method over the ADS recovery period. You may also have to recapture (include in
income) any excess depreciation claimed in previous years. A similar inclusion
amount applies to certain leased property.
Vehicles, computers, computer peripherals, photographic
equipment, audio and video equipment and other types of property that is often used for both
personal and business purposes (known as "listed
property") are special record-keeping requirements and restrictions
on depreciation and expensing.
The second instance is when a property that has been depreciated is sold.
Depreciation recapture is the USA Internal Revenue Service (IRS)
procedure for collecting income tax on a gain realized by a taxpayer when the
taxpayer disposes of an asset that had previously provided an offset to
ordinary income for the taxpayer through depreciation
