Often, when taxpayers hear the words “recapture tax,” they immediately want to avoid it.

To avoid recapture of depreciation deductions on the home office, taxpayers do not claim depreciation.

When the taxpayer does not claim depreciation, the tax law imposes the allowed-versus-allowable depreciation rule. For this purpose:

The depreciation allowed is the amount you claimed on your tax return.

The depreciation allowable is the amount you should have claimed on your tax return.

The allowed and allowable amounts are supposed to be, and generally are, the same. But when you claim zero depreciation on the home office, you obviously have conflicting amounts.

So what does the IRS do to you if you have conflicting amounts? ... Log in to view full article.