文档介绍：Chapter 13
Property Transactions:
Section 1231 and Recapture
Learning Objectives
Identify Sec. 1231 property
Understand the tax treatment for Sec. 1231 transactions
Apply the recapture provisions of Sec. 1245
Apply the recapture provisions of Sec. 1250
Describe other recapture applications
Tax Treatment for Sec. 1231
gains ted against Sec. 1231 Gains treated as LTCG
Net Losses – Treated as ordinary loss.
Five year Look-back rule – Sec. 1231 gain is ordinary to the extent of any Sec. 1231 losses from previous five years.
Tax rate for gain could be 20% or 10%
Section 1231 Defined
Real property or depreciable property used in a trade or business for more than one year
Certain types of property do not qualify as Sec. 1231 property
position
Inventory
Copyright
Letters or memorandum
Section 1231 Defined
Congress extended Sec. 1231 treatment to transactions involving:
Timber
Coal
Livestock
Land with unharvested crops
Involuntary Conversions
Condemnations
Gains and losses from condemned Sec. 1231 property and non-personal condemned capital asset treated as Sec. 1231 gains and losses
Other involuntary conversions
gain from casualties and theft is treated as Sec. 1231 losses on Sec. 1231 property from casualties and theft is treated as ordinary e
Procedure For Sec. 1231
Following steps are necessary to determine Sec. 1231 treatment
All non-personal casualty and theft gains ted
loss, there is ordinary treatment
gain, the amount is included in the regular Sec. ting
Determine amount of Sec. 1231 gain or loss, by gain from step 1
If ting results in gain, the gain is treated as long-term capital gain ****
If ting results in loss, it is treated as ordinary loss
Recapture Provisions Of Section 1245
A gain from disposition of Sec. 1245 property is treated as ordinary to the extent of depreciation taken
Purpose of Sec. 1245
To recapture ordinary deductions as ordinary e
Sec. 1245 is a characterization provision
Section 1245 Property
mon