1. 

   vukz
   

   offline

   Member

   I am just a little confused on some issues with regards to property. Basically this is my understanding

   1231 Property is Depreciable personal use property or real property
   1245 Property is Depreciable personal use property used in a business
   1250 Property is Depreciable real property used in a business

   Could someone please elaborate on these areas. Also the definition of a capital asset are securities held for investment and no inventory ect. Could someone please clarify. Thanks for any feedback it is much appreciated,

   Thanks,

   Vukz

   FAR (75)
   AUD (76)
   BEC (75)
   REG (72), (80)

   • Share this on Facebook
   • Share this on Linkedin
   • Tweet This!
   • Share this on Reddit

   Posted 2 years ago #
2. 

   WisconsinCPA2be
   

   offline

   Member

   Here is my understanding;
   1231 Real or bus property held more than 1 year (not inventory); Gain is long term capital but loss is an ordinary loss
   1245 Machinery and Equipment;Depreciation recapture is ordinary gain, but remainer is 1231 (see above, LT capital gain)
   Depreciation Mid-quarter or 1/2 Year
   1250 real estate in business; Depreciation in excess of straight line is recaptured. Depreciation 27.5 year residential or 39 year non-residential - mid month convention.

   If any of these are held less than a year then its ordinary gain/loss.

   Paper Exam May 2002; AUD 62, LPR, 63, FAR 49, ARE 70
   Paper Exam Nov 2003; AUD 72, LPR, 72, FAR 67, ARE 71
   CBT 2010; AUD 83 FAR 76 BEC 78 REG 73,(2/28/11 NTS # 446) 75 and DONE!

   Posted 2 years ago #
3. 

   CarlyH
   

   offline

   Member

   So I understand the purpose of depreciation recapture but I'm a little confused regarding the difference between 1245 and 1250. I understand how to find the amount of ordinary income/long term capital gain but I don't understand why 1250 only recognizes the additional amount of depreciation as ordinary income and not the full depreciation amount as with 1245. Can anyone shed any light?

   Thanks!

   AUD: 10/1/11 - ::sigh:: 71
   REG: 10/29/11 - ??
   FAR: 11/29/11 - ??
   BEC: 1/6/12 - ??

   Posted 1 year ago #
4. 

   HumanPiranha
   

   offline

   Member

   @Carly

   I think the easiest answer to your question is "because the IRS says so." Sometimes, its just not a good idea to ask why, and this may be one of them.

   Another answer would be, since the 1245 assests and 1250 assets are different classes of assets, they are taxed differently.

   Posted 1 year ago #

RSS feed for this topic