Calculate unrecaptured Section 1250 gain in a mass disposition
When performing a mass disposition, you must dispose of like-kind property together; otherwise, any unrecaptured Section 1250 gain may not be properly calculated.
For example, if you are disposing of a building (Section 1250 property) and a computer (Section 1245 property), these assets should be disposed of independently and gross proceeds proportionately allocated.
Example:
Building ($95,000) and computer ($5,000). Gross proceeds of $120,000 will need to be allocated as:
- Gross proceeds allocated to building = (95,000/100,000) = 95% * 120,000 = $114,000
- Gross proceeds allocated to a computer = (5,000/100,000) = 5% * 120,000 = $6,000
