In order to determine whether gains exceed losses, it is necessary to aggregate recognized gains (in excess of recaptured accelerated depreciation) and losses in the year on all IRC Section 1231 property
Section 1231 property
and properties subject to potential Section 1245 or 1250 recapture are reported on Form 4797.
A loss from the sale of real estate that is Section 1231 property
is totaled with all other losses and gains from the sale of Section 1231 property
recognized during the year.
For example, a taxpayer recognized an ordinary loss from selling IRC section 1231 property
19) If S and B were divisions of a single corporation, however, the corporation could convert what would ordinarily be inventory to section 1231 property
used in its own trade or business (e.
S's $120,000 optional basis adjustment is now allocated on a pro rata basis to the two parcels of land and the equipment, all of which are section 1231 property
Although this proposal would be consistent with the treatment accorded section 1231 property
in general, we realize that the proposal perpetuates asymmetrical tax treatment--albeit one that shifts the balance in favor of the taxpayer and away from the current formulation of the character rules.
Note: Section 1231 property
includes depreciable or real property used in a business or in the production of income, primarily equipment and machinery, buildings and land.
The qualifying property is essentially tangible section 1231 property
, primarily property, plant, and equipment.