Capital Gains & Losses
- Capital Assets
- Investment Property
- Capital Losses versus Ordinary Losses
- Section 1244 Stock
- Personal Use Property
- Noncapital Assets
- Selling Business Property
- Section 1231 Gains and Losses
- Figuring Basis
- Amount Realized
- Holding Period
- Computing Capital Gains and Losses (the netting process)
- Schedule D and Form 8949
- Form 1099-B
- Capital Gains Rate Table
More Tax Topics
- Business Structures
- Start-up Costs
- Depreciation
- Car Expenses
- Home Office Deduction
- Travel Expenses
- Hiring Workers
- Meals and Entertainment
- Retirement
- Top Tax Myths
- Per Diem Rates - IRS Publication 1542 Oct 2011 for Travel Within the Continental U.S (for employers who pay a per diem allowance to employees)
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Need Some Deductions for 2012?
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Updated for 2012
What is Section 1231?
Section 1231 is the section of the Internal Revenue Code that governs the tax treatment of depreciable business property held over one year that is subsequently sold. Such property is referred to as Section 1231 property.
Best of both worlds:
Under Section 1231, you get the best of both worlds, because:
- A net gain is taxed a the lower capital gains rates.
- A net loss is deductible as an ordinary loss.
- An ordinary loss is not subject to the $3,000 annual deduction limit imposed on capital losses.
If you sell Section 1231 property, to figure whether you have a net capital gain or an ordinary loss:
- Subtract the property's adjusted basis from
- The amount realized on the sale.
If a net gain results:
- A net gain is treated as a long-term capital gain and is taxed at the favorable capital gains rates.
If a net loss results:
- A net loss is deductible as an ordinary loss.
See How to Compute a Section 1231 Gain and Loss
Related Links
- What are Capital Assets?
- Selling Investment Property
- Capital Losses and Ordinary Losses Explained
- Nine Rules for Capital Losses.
- What is Section 1244 Stock?
- Special Tax Treatment for Personal Use Property
- Property Not Classified as a Capital Asset
- Inventory, Accounts Receivable, and Notes Receivable
- Depreciable Business Property
- Form 4797, Sale of Business Property
- Figuring Amount Realized
- What Is Your Holding Period?
- How to Determine Your Holding Period
- When the Holding Periods Begins for Certain Types of Items
- Selling Stock
- The Netting Procedure
- Transactions Reported on Schedule D
- Form 1099-B Explained
- Transactions Reported on Schedule D
- Form 1099-B Explained
- Transactions Reported on Schedule D
- Form 1099-B Explained
- Tax Planning Opportunity for Tax Years 2008 through 2010
- Gifting Appreciated Property
- Table: Capital Gains Rates
Copyright © 2008-2013 Larry Villano. All rights reserved.