Section 1231 – depreciable personal, real property used in trade or business and held > 1 year
-Special capital gain treatment on net gains from sales, exchanges of certain non-capital assets
-All 1231 losses are treated as ordinary loss, they are deducted immediately.
-Gains to the extend of accumulated depreciation = ordinary income
-Gain for sale in excess of original cost = 1231 capital gain
Section 1245 (machinery and equipment, gain only)
-personal business property assets used in trade or business for over a year (autos)
-Upon a sale of a 1245 asset all accumulated depreciation is recaptured as ordinary income
-Any remaining gain is a capital gain under section 1231
Section 1250 (buildings, gains only)
-real business property used in trade or business for over 1 year (warehouse)
-Recaptures deprecation in excess of straight line
