In our small business, taking assets to less than 50% use because of reduction of businss, must we recapture?

Question

My husband's business has been cut back about 75% because of health issues. I am changing the percentage use of some equipment he was depreciating to less than 50% use to be realistic with his current business. The items will now be used for personal use. This actually takes them where we no longer are depreciating them. One instance is an older computer that is no longer in use, and we may give it away. We certainly won't sell it. Must we show some sort of recapture? We never claimed section 179 on anything.

Answer 1

"Listed items", such as computers, automobiles, and telephones, may be subject to depreciation recapture if business use goes under 50%.  Computers, for example, become retroactively depreciated at straight line at 12 years.  (There's no problem if there is NO non-business use.)

Otherwise, only the section 179 in the 2001 and Katrina "special allowances" need be recaptured.

Aside from that, converting an asset to 100% personal use has no tax consequences.  Selling it may have tax consequences if sold for more than what the remaining basis would have been after depreciation recalculated as if 100% business use, but that doesn't sound like a problem.  Giving it away seems to be equivalent to converting it to 100% personal use.