What is a section 1231 gain or loss and how is this type of gain or loss beneficial for taxpayers?
Solution
IRC Section 1231 applies to the gains or losses from the sale proceeds of property that is used in
businesses.
Benefits of 1231 Section to taxpayers :
According to Section 1231 profits are treated as Long term capital gains and losses as ordinary or
normal losses.
So if there is a profit from sale proceeds of the property it is taxed at low rates that are applicable
to long term capital gains.
I there is a loss from the sale of property, it can be showed as ordinary loss which reduces
ordinary income and hence falling under the tax bracket shield.