Section 1245 property is property that is or has been subject to an allowance for depreciation or amortization. Specifically, it is property that is depreciable or amortizable (under section 185 (repealed), 197, or 1253(d)(2) or (3) (as in effect before the enactment of P.L. 103-66)) and is one of the following:
- Personal property (either tangible or intangible).
- The part of real property (other than property described under tangible real property below) adjusted for the following:
- The section 179 expense deduction.
- Expenditures to remove architectural and transportation barriers to the handicapped and elderly.
- Amortization of certified pollution control facilities.
- Deduction for clean-fuel vehicles and certain refueling property (as in effect before repeal by P.L. 113-295).
- Deduction for capital costs incurred in complying with EPA sulfur regulations.
- Deduction for certain qualified refinery property.
- Any applicable deduction for qualified energy efficient commercial building property. See section 179D.
- Deduction for election to expense qualified advanced mine safety equipment property.
- Amortization of railroad grading and tunnel bores if in effect before the repeal by the Revenue Reconciliation Act of 1990. (Repealed by P.L. 99-514, Tax Reform Act of 1986, section 242(a).)
- Certain expenditures for childcare facilities if in effect before the repeal by P.L. 101-508, section 11801 (a)(13). (Repealed by P.L. 101-508, Omnibus Budget Reconciliation Act of 1990, section 11801(a)(13), except with regards to deductions made prior to November 5, 1990.)
- Deduction for qualified tertiary injectant expenses.
- Certain reforestation expenditures.
- Any applicable deduction for qualified film, television, or live theatrical production allowed under section 181.
- Tangible real property (except buildings and their structural components) if it is used in any of the following ways:
- As an integral part of manufacturing, production, or extraction or of furnishing transportation, communications, or certain public utility services.
- As a research facility in these activities.
- For the bulk storage of fungible commodities (including commodities in a liquid or gaseous state) used in these activities.
- A single purpose agricultural or horticultural structure (as defined in section 168(i)(13)).
- A storage facility (not including a building or its structural components) used in connection with the distribution of petroleum or any primary petroleum product.
- Elevators and escalators placed in service before 1987.
- Any railroad grading or tunnel bore (as defined in section 168(e)(4)).
Real property not included in the above list is treated as section 1250 property.
Additional Information:
IRS: Instructions for Form 4797, Sale of Business Property
IRS: Publication 544, Sales and Dispositions of Other Assets