When does recapture of appreciation under the shared appreciation agreement occur?

Recapture of appreciation under a shared appreciation agreement occurs in several circumstances, which is why the option that states "all of the above" is correct. Each scenario outlines a specific instance where appreciation may be recaptured:

• At the end of the term of the agreement, any appreciation in value that has accumulated as part of the terms of the agreement would be recaptured to settle any financial obligations or share in the profits based on the agreement.

• If the borrower or their spouse ceases farming at any time, the agreement typically mandates a recapture of appreciation because the shared appreciation deal is usually contingent on the borrower actively engaging in farming activities.

• In the event that the property is transferred or sold, the recapture of appreciation is triggered because the agreement often stipulates that appreciation must be paid back upon any change in property ownership.

These situations encompass all possible triggers for recapturing appreciation, which is why selecting "all of the above" is accurate. Understanding the context of a shared appreciation agreement is crucial for grasping when and why recapturing occurs, ensuring proper compliance and financial planning for both the lender and borrower involved in agricultural financing.