Business Glossary

the accumulated difference between accelerated depreciation claimed for tax purposes and what straight-line depreciation would have been. Generally, excess accelerated depreciation is recaptured (taxed) as ordinary income upon a sale, instead of receiving more favorable capital gains treatment.

Note: Since the 1986 Tax Act, the significance of accelerated depreciation has been diminished because only straight-line may be claimed for real estate acquired since then, and the tax rate differential between ordinary income and capital gains has been minimized.