Depreciation Recapture Tax Liability Model

Description
Did you know there are some nuanced tax effects if you have been depreciating property, equipment, or other items and you go to sell those items in the future?

This most commonly happens with real property that goes up in value, but it can happen to certain equipment items as well. When you sell these assets for a higher value than their book value (book value = cost basis less depreciation), you have to pay taxes on the depreciation expenses that you had taken on the capital asset.

There are all kinds of things to consider with this and the most complicated part is probably the offsets. This is because you can offset depreciation recapture tax liability if there is still a capital loss (meaning you sell the asset for more than the book value, but less than the original cost basis).

To account for all of these things, this template will show you the taxable amount at different points in time and at varying price points. For example, you can see what happens if you sell in 24 months and have depreciated 'x' amount or if you sell in 60 months or 120 months. The model goes out for a maximum period of 600 months.

Initial inputs include:
 - Initial Cost Basis 
 - Depreciation Expense per Period 
 - Net Sale Proceeds 

The final outputs include:
  - Net Taxable Depreciation Recapture (usually taxed at regular income tax rates up to 25%)
  - Remaining Capital Gains/Losses After Recapture (if any)

A tutorial video is included in the file.

This template is also included in two bundles:
- All Models Bundle: https://www.eloquens.com/tool/P8Y4TX4v/finance/financial-forecasting-models/financial-models-120-useful-and-usable-logic
- Accounting Tools: https://www.eloquens.com/tool/axKzHNRV/finance/accounting/accounting-bundle-useful-excel-templates-for-accounting-department