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Subject:  Depreciation recovery Date:  3/3/2002  1:54 PM
Author:  twputnam Number:  59403 of 127613

A friend owned an eight unit apartment building for 17 years which he sold last year. He has not filed a tax return for several years, maybe he should have, since he has no other sources of taxable income and the apartment was not producing net taxable income without considering depreciation.

Question? Does the depreciation get recovered and taxed at 25% even though he had not received a tax benefit from depreciation? In other words it seems since he did not receive a tax benefit from depreciation, it seems he should not be obligated to pay taxes on the depreciation at 25%. He will owe taxes because there is a long term capital gain on the property.

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