Compare and Contrast

Let's say you bought for 300K, and depreciated 150K, and improved 50K was before you start renting, so your depreciation basis is 150K , there is no way to tell 150K includes 50K improvement or not.   So your recaptured depreciation only includes those depreciation actually claimed. 

The problem arises when you started renting and depreciating at 150K, and during rental years you added 50K of improvement, and you are requried to depreciate the additional 50K in a new from 4256, separate the initial 4256 deprecating 150K.  But if you don't have a form 4256 for additional 50K, you might be required to recapture those deprecation from 50K that you never claimed, therefore overpaying some tax.