Section 1250 could convert a portion of Sec.1231 gain into ordinary income if the real property was placed in service prior to 1987 and accelerated depreciation was used.

Question

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Section 1250 of the Internal Revenue Code provides that certain types of gains derived from the sale or exchange of depreciable real property will be treated as ordinary income rather than capital gains. This can happen if the real property was placed in service before 1987 and was subject to accelerated depreciation during its useful life. In such cases, the gain attributable to the depreciation will be treated as ordinary income, while the remaining gain will be treated as a capital gain.

Section 1250 Could Convert a Portion of Sec