Per Diem Rates from the U.S. General Services Administration
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Rates are set by fiscal year, effective October 1 each year. Find current rates in the continental United States ("CONUS Rates").
Example of Net Section 1231 Computation
In tax year 2020 you sell two pieces of equipment (section 1245 property). We'll call them: Property A and Property B. You make a profit on Property A because it is a unique piece of equipment, and a loss on Property B.
Property A:
- Selling price: $20,000
- Basis before depreciation adjustment: $10,000
- Depreciation claimed through current year: $2,000
- Adjusted basis after subtracting depreciation: $8,000
Property B:
- Selling price: $3,000
- Basis before depreciation adjustment: $5,000
- Depreciation claimed through current year: $1,000
- Adjusted basis after subtracting depreciation: $4,000
Net section 1231 gains and losses for the previous five years:
- 2015: ($1,500)
- 2016: $500
- 2017: ($3.000)
- 2018: -0-
- 2019: -0-
Section 1231 Computation
| Property A | |||
| Selling Price | $20,000 | ||
| Basis before depreciation | $10,000 | ||
| Less: Depreciation | (2,000) | ||
| Adjusted Basis | ($8,000) | ||
| Gain on Property A | $12,000 | ||
| Property B | |||
| Selling Price | $3,000 | ||
| Basis before depreciation | $5,000 | ||
| Less: Depreciation | (1,000) | ||
| Adjusted Basis | ($4,000) | ||
| Loss on Property B | (1,000) | ||
| Net Gain on Property A and B | $11,000 | ||
| Less: Recaptured depreciation | (2,000) | ||
| Section 1231 gain The part of the gain that exceeds recaptured depreciation. |
$9,000 | ||
| How to Report the $11,000 Gain | |||
| Recaptured depreciation for Property A: Report as Ordinary income in Part II of Form 4797 Note: Property B had a loss, therefore, no recapture. |
$2,000 | ||
| Recaptured Net section 1231 losses for the previous five years: Report as Ordinary income in Part II of Form 4797 2015 ($1,500), 2016: $500, 2017 ($3,000): |
$4,000 | ||
| Portion of Gain Reported as Ordinary Income Part II of Form 4797 |
$6,000 | ||
| Portion of section 1231 gain Gain Reported as Long-Term Capital Gain ($9,000 minus $4,000) Carry the gain from line 9 of Form 4797 to Schedule D as a long-term capital gain . |
$5,000 |