Get the free Form 4255

This form is used to figure the increase in tax due to the recapture of investment credit claimed. It includes details on the types of properties affected, computation steps for recapture tax, and

How to fill out form 4255

How to fill out Form 4255

1. Obtain Form 4255 from the IRS website or your tax professional.
2. Enter your name, address, and taxpayer identification number at the top of the form.
3. Complete Part I by providing the required information about your property.
4. In Part II, list the depreciation method used and the amount that must be recaptured.
5. Fill out Part III by indicating the date you disposed of the property.
6. Review the form for completeness and accuracy.
7. Sign and date the form before submission.
8. Submit the form with your tax return or as instructed by the IRS.

Who needs Form 4255?

1. Individuals or entities that have claimed a credit for investment in property and later disposed of that property.
2. Taxpayers who need to recapture the investment credit under specific conditions as outlined by the IRS.

People Also Ask about

What is an example of a recapture?

Example: Imagine you purchased a rental property for $300,000 and took $60,000 in depreciation over ten years. The adjusted basis is $240,000. If you sell the property for $280,000, the $40,000 difference between the sale price and the adjusted basis is subject to depreciation recapture tax.

How do I claim my investment tax credit?

Complete a separate Form 3468 to claim an investment credit for each facility or property. You must complete Part I to report facility or property information and the appropriate part (Part II–VII) to compute your investment credit for such facility or property.

What is the IRS form 4255 used for?

Use this form to figure the increase in tax for the recapture of investment credit claimed and for the recapture of a qualifying therapeutic discovery project grant.

What is the purpose of recapture?

Recapture allows a seller of some asset or property to reclaim some or all of it at a later date. The seller will have the option to buy back what has been sold, within a certain window of time, often at a higher price than what it was initially sold for.

What does recapture mean?

recaptured, recapturing. to capture again; recover by capture; retake. (of a government) to take by recapture.

What is the meaning of recapture of credits?

Recapture refers to the government's recovery of a taxpayer's gain from beneficial treatment — such as depreciation tax credits, deductions , or other tax credits — since the beneficial treatment no longer applies. For example, 26 U.S.C.

What does recapture mean in mortgage?

The Federal Recapture Tax is a one-time federal tax on income that becomes owed when you sell a home that has appreciated and your eligibility changes for a federal subsidy you've already received. Our calculator can help you determine if you will owe the tax.

Do I qualify for investment credit recapture?

IRS Form 4255 is used to calculate how much additional tax you might owe if you need to "recapture" (or pay back) some or all of an investment credit you previously claimed. You might need to do this if: You sold or got rid of the property within 5 years of placing it in service.

For pdfFiller’s FAQs

What is Form 4255?

Form 4255 is a tax form used by businesses to report the recapture of investment credit when property is disposed of or no longer qualifies for the tax credit.

Who is required to file Form 4255?

Businesses and individuals who have previously claimed an investment credit and subsequently dispose of the property that generated the credit are required to file Form 4255.

How to fill out Form 4255?

To fill out Form 4255, taxpayers must provide details about the property, the investment credit claimed, the date of disposal, and the recapture amount, following the instructions provided by the IRS.

What is the purpose of Form 4255?

The purpose of Form 4255 is to ensure that taxpayers report the recapture of investment credits when business property is disposed of, helping the IRS ensure compliance with tax laws.

What information must be reported on Form 4255?

Form 4255 requires reporting of the taxpayer's details, information about the disposed property, the amount of investment credit previously claimed, the date of disposal, and the computed recapture amount.