Section 1231, 1245, 1250

CPA Exam Forum The Forum REG Review Section 1231, 1245, 1250

This topic contains 8 replies, has 5 voices, and was last updated by  SeattleAccountant 2 years, 9 months ago.

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  • #162747

    hopefulcpa28
    Member

    Can someone give me an overview on these?

    Here’s how I’m understanding, please let me know if I’m right/wrong/and/or completely off

    Section 1231: Real and Personal property used in business for over 12months.

    Gains: Section 1245 and 1250 gains at a lower rate (0% or 15%) (Gains from sale, exchange, etc…)

    Losses: Ordinary losses instead of capital losses. This way, you won’t have to wait for capital gains to offset your losses. Can deduct it as ordinary losses in the year instead.

    Section 1245: Personal property used in trade or business for over 12 months.

    Income: To the extent of accumulated depreciation. (Lesser or gain recognized or all accumulated depreciation).

    Rest of the gains are recognized as Section 1231 gains.

    No losses under section 1245.

    Section 1250: Real property used in trade or business for over 12 months

    Income: Recaptures only that portion of depreciation taken on real property that is in excess of straight line.

    No losses under Section 1250.

    #474055

    catnguyen
    Member

    i can help you, shoot me an email. cat_nguyen@yahoo.com

    #474111

    catnguyen
    Member

    i can help you, shoot me an email. cat_nguyen@yahoo.com

    #474113

    See Pee A
    Member

    Fairly simple way to do this for many problems.

    Sale price < NBV = ordinary loss

    Sale Price > NBV:

    up to NBV = cost recovery (no income or G/L)

    up to accum. depr. = depr. recapture (ordinary income)

    above NBV + AD (aka original cost) = S1231 gain

    #474057

    See Pee A
    Member

    Fairly simple way to do this for many problems.

    Sale price < NBV = ordinary loss

    Sale Price > NBV:

    up to NBV = cost recovery (no income or G/L)

    up to accum. depr. = depr. recapture (ordinary income)

    above NBV + AD (aka original cost) = S1231 gain

    #474116

    dharani20
    Participant

    @ See Pee A

    Just went over an example using your method. Works well !

    Thanks and good luck

    #474059

    dharani20
    Participant

    @ See Pee A

    Just went over an example using your method. Works well !

    Thanks and good luck

    #474118

    look at: http://www.another71.com/cpa-exam-forum/topic/section-1231-1245-1250-1251

    watch video I’ve posted long ago by Yaeger guy, hope it helps!

    #474061

    look at: http://www.another71.com/cpa-exam-forum/topic/section-1231-1245-1250-1251

    watch video I’ve posted long ago by Yaeger guy, hope it helps!

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