Tax Dictionary
Section 1231 dispositions
If, during the taxable year, the recognized gains on sales or exchanges of property used in the trade or business, plus the recognized gains from the compulsory or involuntary conversion of property used in the trade or business or of capital assets held long-term into other property or money, exceed the recognized losses from such sales, exchanges, and conversions, then such gains and losses are treated as capital gains and losses. If such gains do not exceed such losses, then the gains and losses are treated as ordinary gains and losses. However, to the extent that any Section 1231 gain contains gain from the disposition of Section 1245 or Section 1250 property, such gain will be recaptured as ordinary income to the extent of certain depreciation deductions taken.