Definition of Section 1245 Property – Paul Gaulkin CPA

personal writing financial statementsWhen you think of Section 1245 property, you should really be thinking of Section 1231 property. Section 1245 is actually a subcategory of depreciable Section 1231 property. Section 1245 property is personal property which is subject to depreciation or amortization depending on the type of property. This definition includes property such as:

1. Property that is tangible and was used as an integral part of a specified business activity or activities.

2. Amortized property such as patents and leaseholds of Section 1245 property.

3. Single purpose agricultural or horticultural structures that were used in a trade or business.

4. A storage facility that was used in connection with the distribution or gas or petroleum products.

5. Railroad gradings or tunnel bores.

This should not be considered a comprehensive list, there can be many different property that would be considered Section 1245 property. This can include personal property such as machinery, equipment, cars and trucks that were used in a trade or business.

More Section 1245 Examples

More Section 1245 property examples include:

1. Depreciable property which is expensed under Section 179 is also Section 1245 property under the IRS code.

2. Expenditures to remove architectural and transportation barriers to the handicapped which are deductible under Section 190 are also Section 1245 property.

3. Properties subject to accelerated amortization under Section 169 for pollution facilities, and Section 188 for child care facilities.

4. Section 124 provisions also apply to nonresidential real property if the recovery of cost is under the statutory percentage method of accelerated cost recovery system rather than the straight line method.

Remember that the above lists are not comprehensive and it may be best to consult with a professional if you are unsure as to whether your personal property qualifies under Section 1245.

About Paul Gaulkin CPA

Paul Gaulkin is a Certified Public Accountant and enrolled with the U.S. Treasury to practice before the IRS. Mr. Gaulkin possesses unique technical knowledge in the process of securing relief for taxpayers nationwide with IRS and State tax problems. With an accounting degree from Florida International University, he is able to transform complex tax and accounting problems into easy to understand solutions.


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