Sec_1231_Bucket - OVERVIEW OF SEC 1231 TREATMENT Sec 1231...

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Unformatted text preview: OVERVIEW OF SEC. 1231 TREATMENT Sec. 1231 Property Sale/Exchange Gain Loss Sec. 1231 Property and non-personal-use capital assets Condemnation Gain Loss Casualty/Theft Gain Loss Gain > Loss Gain < Loss Ordinary Loss 1231 Bucket If Loss > Gain Ordinary Loss If Gain > Loss LTCG, but subject to 5-year “look-back” rule “Look-back” rule: Net Sec 1231 Gain is treated as ordinary to the extent that taxpayer has “nonrecaptured net Sec 1231 losses” during the preceding 5 years. Note: Sec 1231 gains are determined AFTER depreciation recapture. Gains that are recaptured as ordinary income under Secs. 1245, 1250 or 291 never get in the bucket. ...
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