TITLE 26. INTERNAL REVENUE CODE § 1231. Property used in the trade or business and involuntary conversions [Caution: For decrease in holding period required for long-term capital gain treatment to six months for property acquired between 6/22/1984 and 1/1/1988, see 1984 amendment note below.]., 26 USCS § 1231

Summary

(a) General rule.

(1) Gains exceed losses. If—

(A) the section 1231 gains for any taxable year, exceed

(B) the section 1231 losses for such taxable year,

such gains and losses shall be treated as long-term capital gains or long-term capital losses, as the case may be.

(2) Gains do not exceed losses. If—

(A) the section 1231 gains for any taxable year, do not exceed

(B) the section 1231 losses for such taxable year,

such gains and losses shall not be treated as gains and losses from sales or exchanges of capital assets.

(3) Section 1231 gains and losses. For purposes of this subsection—

(A) Section 1231 gain. The term “section 1231 gain” means—

(i) any recognized gain on the sale or exchange of property used in the trade or business, and

(ii) any recognized gain from the compulsory or involuntary conversion (as a result of destruction in whole or in part, theft or seizure, or an exercise of the power of requisition or condemnation or the threat or imminence thereof) into other property or money of—

(I) property ...