Introductory Concepts:

Section 1231 relates to how gains and losses are netted and treated after depreciation recapture has been taken care of.

Section 1231 losses - Total losses from the past 5 years are subject to recapture at ordinary rates.

Section 1245 and Section 1250 relate primarily to depreciation recapture, which are in addition to the recapture of 1231 losses.

1245 property is generally defined as “Personal Property” and 1250 property is generally defined as “Real Property” or “Any Real Property that isn’t 1245 property” (which is most Real Property)

Section 1250 Property can be permanently be converted to 1245 property in extremely rare situations.

Property Types

• Tangible Property

• Intangible Property

• Real Property

• Personal Property (movable property)

Code Sections Defining Property Types and Treatment

• 1231 Property
• 1245 Property
• 1231 and 1245 differences
• 1250 Property
• Recapture is not triggered for Like-Kind Exchanges, Involuntary Conversions when replacement property is acquired, and Gifts.

Other Details:

Property Transactions

• 1231 Transactions
• 1031 Transactions (like-kind exchange)
• 1033 Transactions (involuntary conversions)

Residential and Non-Residential Distinctions