Section 1231 applies to the sale or exchange of business properties but not to personal use activity casualties.

Question

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Section 1231 of the Internal Revenue Code only applies to the sale or exchange of business properties, such as equipment, buildings, and land used in a trade or business. It does not apply to personal use property or activity casualties. Personal use property may be subject to different tax rules, such as those governing capital gains and losses.

Section 1231 Applies to the Sale or Exchange of Business