Capital gains tax

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notAgrandma's picture
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07/07/2017

Does anyone know how capital gains taxes in the US are applied when selling a business? We have friends that recently sold their B&B and I'm wondering how big their tax bill will be. I know depreciation schedules affect the taxes, but I have no idea how. They owned their B&B for 13 years. The previous owners of our B&B owned the place 17 years and were hit with a $60,000 tax bill that took them several years to pay off. If a B&B is sold as a house, does that affect the capital gains taxes?

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notAgrandma's picture
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07/07/2017

Thank you! They'll be consulting an accountant after closing on the property, but I was curious if anyone had knowledge of how capital gains taxes "work". Smiling 

OnTheShore's picture
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08/28/2011

I think the capital gain is reported on your annual income tax return on the appropriate line, the tax on it is computed at it's own rate, and the result is thrown in with the rest of the tax that you owe.

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OnTheShore's picture
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08/28/2011

Not expert on this, but if you are claiming depreciation expense on a business asset, and then sell the asset for more than it's depreciated book value, you will be subject to "recapture" of the depreciated value, and will have to pay taxes on it. Any excess above the original purchase price would likely be treated as a capital gain.

It does not matter how the purchaser of the asset intends to use it (business or personal use).

gillumhouse's picture
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05/22/2008

I have been given to understand that the deprecisation taken must be paid. Other than that, I know nothing.

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