2.4 Section 1231 and Recapture

1. Section 1231 Assets

Sec. 1231 assets are real or depreciable business property held for more than one year.

2. Tax Treatment for Sec. 1231 Assets

1) Sec. 1231 gains
Lower capital gain tax rate (15% for most taxpayers)

2) Sec. 1231 losses
Ordinary loss

3) Netting procedures of Sec. 1231 gains and losses

3. Recapture Provision of Sec. 1245

1) Section 1245 asset
Sec. 1245 assets are generally depreciable personal property.

2) Section 1245 recapture
All accumulated depreciation is recaptured as ordinary income.

4. Recapture Provision of Sec. 1250

1) Section 1250 asset
Section 1250 assets are depreciable real property.

2) Section 1250 recapture

3) Section 291 recapture (for C corporations)