Don’t be a sheep: Take action on income inequality and support your community

Are you unknowingly supporting a system which increases income inequality and weakens communities? The answer might surprise you.

This article is Part II of a series on taxation and income inequality in the U.S. – for Part I of the series, see The U.S. tax system: Inequality’s best friend.

Taxes on gains and 1031 transactions

Profit is a beautiful thing for everyone – or at least it has that potential. A profit is made when an assetA valuable item which can be converted to cash by its owner. is sold for more than was originally paid for it, taking into account transactional costs and depreciation.

Depreciation comes into play when an assetA valuable item which can be converted to cash by its owner. is held for at least 12 months due to cost recovery deductions returning invested capital without taxation. However, depreciation is taxed on a sale as unrecaptured gain at a maximum rate of 25%. If any amount remains after taking into account the unrecaptured gain, this is considered a capital gain, a part of the profit, also subject to taxation.