Depreciation recapture on Real Property eligible for QBI?

[RTS1823]

I've searched but can't seem to find a straight answer, would depreciation recapture due to real property used in a business like a home office qualify for the QBI deduction or is it just depreciation recapture on business equipment, etc that counts?  Thanks!

[itonewbie · Accepted solution]

If you are talking about unrecaptured §1250, it is taxed as capital gain and not eligible for QBI deduction according to the code and regulations.  If you're talking about recaptures that are ordinary income (e.g. §1245), it is then eligible to the extent it is attributable to a qualified trade or business.

[RTS1823]

Thank you.  Yes, I was talking about unrecaptured 1250 gain.

[TaxGuyBill]

Interesting, I didn't realize that (or forgot about it).  Do you offhand know where that is?  If not, I'll look for it later.

[itonewbie]

@TaxGuyBill They discuss that under IV.(A)(10) of the Final Regs and updated §1.199A-3(b)(2)(ii)(A).

[TaxGuyBill]

Thank you!

[itonewbie]

:smile:

[Marc-TaxMan]

see: https://accountants-community.intuit.com/questions/1807329-how-to-flow-4797-gain-to-qbi-worksheet

right on point.