Section 1231 of the Internal Revenue Code pertains to assets used in a trade or business. Gains on Section 1231 assets are generally taxed at capital gains rates, except for depreciation recapture, while losses are tax-deductible as ordinary income.
Trade or business property, as referenced in Section 1231, refers to property used in a trade or business activity that can provide tax benefits upon sale or exchange. Such properties are subject to specific tax regulations that can impact depreciation and capital gains treatment.
