Internal Revenue Code · 26 U.S.C.
§ 1245. Gain from dispositions of certain depreciable property
Official text, no changes From the Office of the Law Revision Counsel, release point 119-121 (current through Public Law 119-121 (October 9, 2026)). Compare it with the official text at uscode.house.gov (external site).
Cite as 26 U.S.C. § 1245
At a glance
Read from the text, the source credit and the official notes. Not part of the law.
- Status
- In force
- Added
- October 16, 1962 by Pub. L. 87–834
- Last amended
- July 4, 2025 by Pub. L. 119–21
- Amendments
- 27 dated changes in the source credit
- Length
- 4 subsections · 1,682 words · about 7 min to read
- Defines
- 1 term
- Cross-references
- cites 13; cited by 26 Code sections and 62 other regulations
- Regulations
- 6 issued under this section
The term “recomputed basis” means, with respect to any property, its adjusted basis recomputed by adding thereto all adjustments reflected in such adjusted basis on account of deductions (whether in respect of the same or other property) allowed or allowable to the taxpayer or to any other person for depreciation or amortization.
For purposes of subparagraph (A), if the taxpayer can establish by adequate records or other sufficient evidence that the amount allowed for depreciation or amortization for any period was less than the amount allowable, the amount added for such period shall be the amount allowed.
Any deduction allowable under section 179, 179B, 179C, 179D, 179E, 181, 190, 193, or 194 shall be treated as if it were a deduction allowable for amortization.
Except as provided in section 691 (relating to income in respect of a decedent), subsection (a) shall not apply to a transfer at death.
If the basis of property in the hands of a transferee is determined by reference to its basis in the hands of the transferor by reason of the application of section 332, 351, 361, 721, or 731, then the amount of gain taken into account by the transferor under subsection (a)(1) shall not exceed the amount of gain recognized to the transferor on the transfer of such property (determined without regard to this section). Except as provided in paragraph (6), this paragraph shall not apply to a disposition to an organization (other than a cooperative described in section 521) which is exempt from the tax imposed by this chapter.
For purposes of this section, the basis of section 1245 property distributed by a partnership to a partner shall be deemed to be determined by reference to the adjusted basis of such property to the partnership.
The second sentence of paragraph (3) shall not apply to a disposition of section 1245 property to an organization described in section 511(a)(2) or 511(b)(2) if, immediately after such disposition, such organization uses such property in an unrelated trade or business (as defined in section 513).
If any property with respect to the disposition of which gain is not recognized by reason of subparagraph (A) ceases to be used in an unrelated trade or business of the organization acquiring such property, such organization shall be treated for purposes of this section as having disposed of such property on the date of such cessation.
In determining, under subsection (a)(2), the recomputed basis of property with respect to which a deduction under section 194 was allowed for any taxable year, the taxpayer shall not take into account adjustments under section 194 to the extent such adjustments are attributable to the amortizable basis of the taxpayer acquired before the 10th taxable year preceding the taxable year in which gain with respect to the property is recognized.
If a taxpayer disposes of more than 1 amortizable section 197 intangible (as defined in section 197(c)) in a transaction or a series of related transactions, all such amortizable 197 intangibles shall be treated as 1 section 1245 property for purposes of this section.
Subparagraph (A) shall not apply to any amortizable section 197 intangible (as so defined) with respect to which the adjusted basis exceeds the fair market value.
This section shall apply notwithstanding any other provision of this subtitle.
(Added Pub. L. 87–834, § 13(a)(1), Oct. 16, 1962, 76 Stat. 1032; amended Pub. L. 88–272, title II, § 203(d), Feb. 26, 1964, 78 Stat. 35; Pub. L. 91–172, title II, § 212(a)(1), (2), title VII, § 704(b)(4), Dec. 30, 1969, 83 Stat. 571, 670; Pub. L. 92–178, title I, § 104(a)(2), title III, § 303(c)(1), (2), Dec. 10, 1971, 85 Stat. 501, 522; Pub. L. 94–81, § 2(a), Aug. 9, 1975, 89 Stat. 417; Pub. L. 94–455, title II, § 212(b)(1), title XIX, §§ 1901(a)(140), (b)(3)(K), (11)(D), 1906(b) (13)(A), 1951(c)(2)(C), title XXI, §§ 2122(b)(3), 2124(a)(2), Oct. 4, 1976, 90 Stat. 1546, 1787, 1793, 1795, 1834, 1840, 1915, 1917; Pub. L. 95–600, title VII, § 701(f)(3)(A), (B), (w)(1), (2), Nov. 6, 1978, 92 Stat. 2901, 2920; Pub. L. 96–223, title II, § 251(a)(2)(C), Apr. 2, 1980, 94 Stat. 287; Pub. L. 96–451, title III, § 301(c)(1), Oct. 14, 1980, 94 Stat. 1990; Pub. L. 97–34, title II, §§ 201(b), 202(b), 204(a)–(d), 212(d)(2)(F), Aug. 13, 1981, 95 Stat. 218, 220, 222, 223, 239; Pub. L. 97–448, title I, § 102(e)(2)(B), Jan. 12, 1983, 96 Stat. 2371; Pub. L. 98–369, div. A, title I, § 111(e)(5), (10), July 18, 1984, 98 Stat. 633; Pub. L. 99–121, title I, § 103(b)(1)(D), Oct. 11, 1985, 99 Stat. 509; Pub. L. 99–514, title II, § 201(d)(11), Oct. 22, 1986, 100 Stat. 2141; Pub. L. 100–647, title I, § 1002(i)(2)(I), Nov. 10, 1988, 102 Stat. 3371; Pub. L. 101–239, title VII, § 7622(b)(2)[(d)(2)], Dec. 19, 1989, 103 Stat. 2378; Pub. L. 101–508, title XI, §§ 11704(a)(13), 11801(c)(6)(E), (8)(H), 11813(b)(21), Nov. 5, 1990, 104 Stat. 1388–518, 1388–524, 1388–555; Pub. L. 103–66, title XIII, § 13261(f)(4), (5), Aug. 10, 1993, 107 Stat. 539; Pub. L. 104–7, § 2(b), Apr. 11, 1995, 109 Stat. 93; Pub. L. 104–188, title I, § 1703(n)(6), Aug. 20, 1996, 110 Stat. 1877; Pub. L. 105–34, title XVI, § 1604(a)(3), Aug. 5, 1997, 111 Stat. 1097; Pub. L. 108–357, title III, § 338(b)(5), title VIII, § 886(b)(2), Oct. 22, 2004, 118 Stat. 1481, 1641; Pub. L. 109–58, title XIII, §§ 1323(b)(1), 1331(b)(2), 1363(a), Aug. 8, 2005, 119 Stat. 1014, 1024, 1060; Pub. L. 109–135, title IV, §§ 402(a)(6), 403(e)(2), (i)(2), Dec. 21, 2005, 119 Stat. 2610, 2623, 2625; Pub. L. 109–432, div. A, title IV, § 404(b)(3), Dec. 20, 2006, 120 Stat. 2956; Pub. L. 113–295, div. A, title II, § 221(a)(34)(H), Dec. 19, 2014, 128 Stat. 4042; Pub. L. 115–141, div. U, title IV, § 401(b)(31), Mar. 23, 2018, 132 Stat. 1203; Pub. L. 119–21, title VII, § 70307(b), July 4, 2025, 139 Stat. 201.)
Terms defined here
Where the text says “the term … means”. Select a term to jump to its definition.
Regulations under this section
Treasury regulations (26 CFR) issued under § 1245
- § 1.1245-1 General rule for treatment of gain from dispositions of certain depreciable property.
- § 1.1245-2 Definition of recomputed basis.
- § 1.1245-3 Definition of section 1245 property.
- § 1.1245-4 Exceptions and limitations.
- § 1.1245-5 Adjustments to basis.
- § 1.1245-6 Relation of section 1245 to other sections.
Cross-references
Computed from the citations in the text of Title 26 and 26 CFR.
This section cites 13 other sections
- § 179 Election to expense certain depreciable business assets
- § 167 Depreciation
- § 169 Amortization of pollution control facilities
- § 168(i)(13) Accelerated cost recovery system
- § 691 Recipients of income in respect of decedents
- § 332 Complete liquidations of subsidiaries
- § 521 Exemption of farmers’ cooperatives from tax
- § 1031 Exchange of real property held for productive use or investment
- § 751(b) Unrealized receivables and inventory items
- § 511(a)(2) Imposition of tax on unrelated business income of charitable, etc., organizations
- § 513 Unrelated trade or business
- § 194 Treatment of reforestation expenditures
- § 197 Amortization of goodwill and certain other intangibles
Cited by 26 Code sections
- § 50(c)(4)(A) Other special rules
- § 108(e)(7)(A) Income from discharge of indebtedness
- § 168(e)(3)(B)(v) Accelerated cost recovery system
- § 169(j) Amortization of pollution control facilities
- § 170(e)(3)(D) Charitable, etc., contributions and gifts
- § 179(d)(1)(B)(i) Election to expense certain depreciable business assets
- § 179B(c)(2) Deduction for capital costs incurred in complying with Environmental Protection Agency sulfur regulations
- § 198(e) Expensing of environmental remediation costs
- § 263A(e)(1)(A)(i) Capitalization and inclusion in inventory costs of certain expenses
- § 291(a)(1)(A) Special rules relating to corporate preference items
- § 451(k)(2)(A) General rule for taxable year of inclusion
- § 453(i)(2) Installment method
- § 465(c)(1)(C) Deductions limited to amount at risk
- § 467(c)(5)(A) Certain payments for the use of property or services
- § 512(b)(3)(A)(i) Unrelated business taxable income
- § 613(a) Percentage depletion
- § 617(d)(3) Deduction and recapture of certain mining exploration expenditures
- § 751(c)(2) Unrealized receivables and inventory items
- § 861(d)(1)(A) Income from sources within the United States
- § 1017(d)(1) Discharge of indebtedness
- § 1250(c) Gain from dispositions of certain depreciable realty
- § 1252(b) Gain from disposition of farm land
- § 1254(b)(1) Gain from disposition of interest in oil, gas, geothermal, or other mineral properties
- § 1255(b)(1) Gain from disposition of section 126 property
Show 2 more
Cited in 62 regulations not issued under it
- § 1.30-1 Definition of qualified electric vehicle and recapture of credit for qualified electric vehicle.
- § 1.48-10 Single purpose agricultural or horticultural structures.
- § 1.57-0 Scope.
- § 1.57-1 Items of tax preference defined.
- § 1.58-2 General rules for conduit entities; partnerships and partners.
- § 1.58-4 Electing small business corporations.
- § 1.84-1 Transfer of appreciated property to political organizations.
- § 1.110-1 Qualified lessee construction allowances.
- § 1.167(a)-11 Depreciation based on class lives and asset depreciation ranges for property placed in service after December 31, 1970.
- § 1.167(e)-1 Change in method.
- § 1.168(i)-1 General asset accounts.
- § 1.168(i)-4 Changes in use.
- § 1.168(i)-6 Like-kind exchanges and involuntary conversions.
- § 1.168(i)-8 Dispositions of MACRS property.
- § 1.168(j)-1T Questions and answers concerning tax-exempt entity leasing rules (temporary).
- § 1.168(k)-0 Table of contents.
- § 1.168(k)-1 Additional first year depreciation deduction.
- § 1.168(k)-2 Additional first year depreciation deduction for property acquired and placed in service after September 27, 2017.
- § 1.170A-4 Reduction in amount of charitable contributions of certain appreciated property.
- § 1.170A-8 Limitations on charitable deductions by individuals.
- § 1.179-1 Election to expense certain depreciable assets.
- § 1.181-4 Special rules.
- § 1.197-2 Amortization of goodwill and certain other intangibles.
- § 1.263(a)-3 Amounts paid to improve tangible property.
Show 38 more
- § 1.263A-0 Outline of regulations under section 263A.
- § 1.263A-4 Rules for property produced in a farming business.
- § 1.267(a)-2T Temporary regulations; questions and answers arising under the Tax Reform Act of 1984 (temporary).
- § 1.281-3 Definitions.
- § 1.338-4 Aggregate deemed sale price; various aspects of taxation of the deemed asset sale.
- § 1.338-7 Allocation of redetermined ADSP and AGUB among target assets.
- § 1.367(a)-4 Special rule applicable to U.S. depreciated property.
- § 1.446-1 General rule for methods of accounting.
- § 1.453-11 Installment obligations received from a liquidating corporation.
- § 1.467-7 Section 467 recapture and other rules relating to dispositions and modifications.
- § 1.512(b)-1 Modifications.
- § 1.514(d)-1 Basis of debt-financed property acquired in corporate liquidation.
- § 1.613-5 Taxable income from the property.
- § 1.617-3 Recapture of exploration expenditures.
- § 1.617-4 Treatment of gain from disposition of certain mining property.
- § 1.736-1 Payments to a retiring partner or a deceased partner's successor in interest.
- § 1.751-1 Unrealized receivables and inventory items.
- § 1.897-5T Corporate distributions (temporary).
- § 1.907(c)-1 Definitions relating to FOGEI and FORI (for taxable years beginning after December 31, 1982).
- § 1.995-2 Deemed distributions in qualified years.
- § 1.1011-2 Bargain sale to a charitable organization.
- § 1.1031(a)-3 Definition of real property.
- § 1.1039-1 Certain sales of low-income housing projects.
- § 1.1250-1 Gain from dispositions of certain depreciable realty.
- § 1.1250-3 Exceptions and limitations.
- § 1.1251-1 General rule for treatment of gain from disposition of property used in farming where farm losses offset nonfarm income.
- § 1.1251-2 Excess deductions account.
- § 1.1251-3 Definitions relating to section 1251.
- § 1.1251-4 Exceptions and limitations.
- § 1.1252-2 Special rules.
- § 1.1254-1 Treatment of gain from disposition of natural resource recapture property.
- § 1.1254-3 Section 1254 costs immediately after certain acquisitions.
- § 1.1400L(b)-1 Additional first year depreciation deduction for qualified New York Liberty Zone property.
- § 1.1400Z2(a)-1 Deferring tax on capital gains by investing in opportunity zones.
- § 1.1502-13 Intercompany transactions.
- § 1.9200-1 Deduction for motor carrier operating authority.
- § 3.4 Establishment of accounts.
- § 301.9100-7T Time and manner of making certain elections under the Tax Reform Act of 1986.
Amendment history
From the source credit and the official notes, newest first.
- Amended by Pub. L. 119–21Parts changed in 2025: (a)(3)(G)
- Amended by Pub. L. 115–141Parts changed in 2018: (a)(3)(C)
- Amended by Pub. L. 113–295Parts changed in 2014: (a)(2)(C)
- Amended by Pub. L. 109–432Parts changed in 2006: (a)(2)(C)
- Amended by Pub. L. 109–135Parts changed in 2005: (a)(2)(C) (a)(3)(C) (b)(3) (b)(5) (b)(9)
- Amended by Pub. L. 109–58
- Amended by Pub. L. 108–357Parts changed in 2004: (a)(2)(C) (a)(4)
- Amended by Pub. L. 105–34Parts changed in 1997: (a)(2)(C)
- Amended by Pub. L. 104–188Parts changed in 1996: (a)(3)
- Amended by Pub. L. 104–7Parts changed in 1995: (b)(5)
- Amended by Pub. L. 103–66Parts changed in 1993: (a)(2)(C) (a)(3)
- Amended by Pub. L. 101–508Parts changed in 1990: (a)(3) (a)(3)(C) (a)(3)(D) (b)(3)
- Amended by Pub. L. 101–239Parts changed in 1989: (a)(2)(C) (a)(3)
- Amended by Pub. L. 100–647Parts changed in 1988: (a)(3)(F)
- Amended by Pub. L. 99–514Parts changed in 1986: (a)(1) (a)(2) (a)(3) (a)(5)
- Amended by Pub. L. 99–121Parts changed in 1985: (a)(5)(A)
- Amended by Pub. L. 98–369Parts changed in 1984: (a)(5)(A) (d)(5)(D)
- Amended by Pub. L. 97–448Parts changed in 1983: (a)(3)(F)
- Amended by Pub. L. 97–34Parts changed in 1981: (a)(1) (a)(2) (a)(3)(D) (a)(3)(E) (a)(5) (a)(6)
- Amended by Pub. L. 96–451Parts changed in 1980: (a)(2) (a)(3)(D) (b)(8)
- Amended by Pub. L. 96–223
- Amended by Pub. L. 95–600Parts changed in 1978: (a)(2) (a)(3)(D) (a)(4)(B) (a)(4)(C)
- Amended by Pub. L. 94–455Parts changed in 1976: (a)(1) (a)(2)(D) (a)(2) (a)(3)(D) (a)(4) (b)(5) (b)(7)(B) (c)
- Amended by Pub. L. 94–81Parts changed in 1975: (b)(3)
- Amended by Pub. L. 92–178Parts changed in 1971: (a)(2) (a)(3)(B)(ii) (a)(3)(D)
- Amended by Pub. L. 91–172Parts changed in 1969: (a)(2) (a)(3)
- Amended by Pub. L. 88–272Parts changed in 1964: (a)(2)
- Added by Pub. L. 87–834
Where it sits in the Code
- Subtitle A Income Taxes
- Chapter 1 NORMAL TAXES AND SURTAXES
- Subchapter P Capital Gains and Losses
- Part IV SPECIAL RULES FOR DETERMINING CAPITAL GAINS AND LOSSES
Nearby sections
- § 1241 Cancellation of lease or distributor’s agreement
- § 1242 Losses on small business investment company stock
- § 1243 Loss of small business investment company
- § 1244 Losses on small business stock
- § 1245 Gain from dispositions of certain depreciable property
- § 1246, 1247 Repealed
- § 1248 Gain from certain sales or exchanges of stock in certain foreign corporations
- § 1249 Gain from certain sales or exchanges of patents, etc., to foreign corporations
- § 1250 Gain from dispositions of certain depreciable realty
Official notes
The Law Revision Counsel's notes for this section (amendments, effective dates and related laws) are long, so they have their own page.