Regs. allocate Sec. 1245 recapture among partners

Article Abstract:

Proposed Regulations (REG-209762-95,12/11/96) provides guidelines on the distribution of depreciation recapture within a partnership that disposes of Sec. 1245 property for which the partnership or a contributing partner was allowed depreciation deductions. Under the new rules, a partner's share of recapture is the same amount as the lesser of that partner's share of the total gain from the disposition of the property or share of depreciation from the property. Unallocated recapture gains are to be distributed among partners with shares of the total gain on the property's disposition are greater than their shares of the property's depreciation. The new rules will take effect for partnership properties acquired upon the issuance of the final Regulations.

Partnership, Partnerships, Depreciation, Recapture (Taxation)

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Regs. provide rules for Sec. 467 rental agreements

Article Abstract:

Proposed Regulations detail the requirement of accruing rent and interest under leases of tangible personal property that offer rising or falling rents, or deferred or prepaid rents. The Regulations will cover leases entered into after the issuance of the final Regulations, although they take effect immediately for agreements having a main objective of tax avoidance that are disqualified leasebacks and long-term rental agreements. The Regulations mandate accruing a proportional rental amount for Sec. 467 rental agreements if rent is payable after the period it is related to, which means that deferred rent and adequate interest are not charged. However, a one-year grace period is allowed.

Contracts, Rents (Property), Personal property, Accrual basis accounting

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