Depreciation recapture is where Form 4797 gets expensive for farm clients —
and where assumptions from other practice areas fail most visibly.
Equipment depreciated at 100% bonus carries zero basis: the full sale price
up to original cost is ordinary income, not capital gain. A farm building that
received bonus treatment can face recapture at ordinary rates, not the 25%
cap many practitioners expect. Farmland sold within ten years of
conservation expenditures gives back a fraction of every dollar deducted.
This course works through the recapture mechanics that complete the Form
4797 picture for farm dispositions: Part III calculations for equipment,
buildings, and farmland and Part IV calculations when business use drops
below 50%.
