Section 1231 Property

Business property eligible for special tax treatment.

QUICK ANSWER

Section 1231 Property refers to business assets like real estate or equipment that receive favorable tax treatment when sold, combining benefits of capital gains and ordinary losses.

In depth

Section 1231 Property includes depreciable business assets and real estate held for more than one year. When sold, gains are typically taxed at lower capital gains rates, while losses can be treated as ordinary losses, which can fully offset other income. This dual treatment makes it advantageous for business owners. For startups, this applies to assets like office property or equipment. Proper classification and holding period are important to qualify for these tax benefits under US tax rules.