Drake Tax - 4562: Section 1231 Property Type
Article #: 12943
Last Updated: October 18, 2024
Section 1231 refers to the tax treatment of certain types of property under IRC 26 Section 1231. Section 1231 gains and losses are the taxable gains and losses from section 1231 transactions. The treatment as ordinary or capital depends on whether there is a net gain or net loss from all section 1231 transactions.
Note The sale of various types of 1231 property is treated differently. Therefore, there is no selection for section 1231 on the Property type drop list. Instead, select the type of 1231 property being sold, such as 1245 or 1250.
Transactions to which section 1231 can be applied.
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Sales or exchanges of real property or depreciable personal property
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Sales or exchanges of leaseholds
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Sales or exchanges of cattle and horses
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Sales or exchanges of other livestock
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Sales or exchanges of unharvested crops
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Cutting of timber or disposal of timber, coal, or iron ore
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Condemnations
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Casualties and thefts
Transactions to which section 1231 cannot be applied.
Section 1231 transactions do not include sales or exchanges of these non-capital assets:
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Property for sale to customers
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Patents and copyrights
For more detailed information about section 1231 transactions, see Publication 544.