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From: koch@chopin.DEC (Kevin Koch LTN1-2/B17 DTN229-6274)
Newsgroups: net.taxes
Subject: Alternative view of recapture of accelerated depreciation
Message-ID: <3255@decwrl.UUCP>
Date: Tue, 23-Jul-85 21:22:29 EDT
Article-I.D.: decwrl.3255
Posted: Tue Jul 23 21:22:29 1985
Date-Received: Thu, 25-Jul-85 07:29:02 EDT
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> ... When I complained to my accountant that because I was not
>eligible for ACRS depreciation, ... and asked what schedule and time
>frame to set it up on, he advised plain old straight line
>depreciation.  ... 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. 
>
>I set my depreciation schedule up as 20 years, Straight Line. Now upon
>sale all appreciation to the depreciated basis of the property is long
>term capital gain, and declarable at a much lower level. 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. 

     If you and I bought, held, and sold identical pieces of property
for identical times and prices, but I used ACRS and you used straight
line, who would be ahead? 

    I WOULD!!!! because I would have gotten an interest free loan from
the IRS for the entire time I owned the property.  The amount of the 
loan would be the amount of accelerated depreciation recaptured at the 
sale.