Well, color me embarrassed! I got into an argument with TurboTax about some machinery I sold to Aaron as part of the transition on our farm. The stooopid program taxed the sale as ordinary income, instead of the relatively delightful 15% I had planned.
Only capital gains on depreciable property aren't like capital gains on say, shares of stock or farmland.
The income tax consequences of an outright sale can be substantial, as shown in Example 2. For the seller, a large amount of recaptured depreciation and capital gain may arise from the sale, especially if some assets have an adjusted tax basis of zero; that is, they are "depreciated out." Reporting all the income and gain in one tax year may cause some of it to be taxed at a higher marginal rate than the seller usually pays. In addition, most sellers prefer to spread out or postpone tax payments whenever possible. [More]
Which is exactly what TT calculated. All my stuff is depreciated out, thanks to Sec. 179, and all the various bonus depreciation boondoggles of the past few years. And I didn't sell any of it
below above original cost.
I guess I can keep working for another few years...(sigh)
Feel free to hoot with derision at my ignorance.
My so-called friends did...