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From: dys@homxa.UUCP (D.SZE)
Newsgroups: net.invest,net.taxes
Subject: Re: Reagan tax plan vs. Real Estate
Message-ID: <1051@homxa.UUCP>
Date: Thu, 25-Jul-85 14:59:40 EDT
Article-I.D.: homxa.1051
Posted: Thu Jul 25 14:59:40 1985
Date-Received: Sat, 27-Jul-85 00:04:14 EDT
References: <815@qumix.UUCP>, <780@burl.UUCP>
Organization: Bell Communications Research
Lines: 32
Xref: watmath net.invest:716 net.taxes:870

In response to William Sykes' response:

> In article <815@qumix.UUCP>  len@qumix.UUCP (Leonard Labar) writes:

> > I just read in the paper that the depreciation schedule for real estate
> > investments was stretched out to 19 years vs. the previous ACRS method.
> > ...  How much would I lose from the previous ACRS
> > depreciation schedule?  

	
> ...  that the difference between the capital
> gain realized with ACRS, DDB, or any other accelerated 
> depreciation, and what would be realized upon sale with 
> straight line would not be subject to capital gains taxation.
> The difference would be taxable as ORDINARY INCOME. 
> 
> ... The moral of the story being that
> accelerated capital recovery may be advantageous in the
> short term, for property that in reality appreciates it
> will bite you in the wallet upon sale.

Agreed that the difference (ACRS-SL) is taxed as ordinary
income, but that is tax deferred income.  It is doubly great
that depreciation turns (ordinary, this year) into
(long term, future year) - it is still singly great
that ACRS turns (ordinary, this year) into (ordinary, future year).
(Unless of course you have an alternative minimum tax problem.)

David Sze
Bell Communications Research
West Long Branch, NJ