In the case of a commercial property (example: an office bldg.), when I sell it, the capital gain is sale price less depreciable base, which means the depreciation I used in the past years will be added back in, uncle Sam gets his hands on the money eventually.
If that is also true with my equipment (Hummer), if I sell it 1 year later for $50000, my gain is $50,000 - $18240 = $31,760. I sell it $10K less than I bought it, but because of the depreciation I use in the first year, I actually make $31760 taxable income on the next year‘s returns. Is this correct? And is it regular income or is it capital gains with higher tax rate?
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