Where Form 1120 Schedule M 3 Disposition 2019-2024

Hey, it's a tax question from TaximMama.com. Today, Tax Mama hears from Fred in the Tax Scripts forum with a technical question. He says, "Page 32 of the 2010 instructions for Form 1120S, the Sub S Corporation tax return, explains how to determine the adjusted gain or loss to enter on Line 15B of the 1120S Form K-1 or Schedule K-1. Then, it says that if any part of the adjustment is net section 1231 gain or loss, identify the amount of the adjustment that is unrecaptured 1250 gain. How do I figure out the amount of the adjustment that is unrecaptured 1250 gain?" Well, Fred, it sounds like gobbledygook, doesn't it? First of all, you have to know what Internal Revenue Code section 1250 is, and then you need to know what section 1231 is or vice versa. Essentially, with section 1231, what you have is a capital gain from the sale of an asset used for business. And if there happens to be section 1250 recapture, it's because the business asset is real estate. You recapture the depreciation when the depreciation that you took or should have taken exceeds straight-line depreciation taken over 40 years. That part of the gain will be treated as ordinary income, subject to a tax rate of 25%, instead of the usual 0% or 15% capital gains rates. Now, did that sound like more gobbledygook? This may be a bit complicated if you're not a tax professional. In fact, it's complicated even if you are. So if you don't clearly understand this explanation, I urge you to work with a tax professional to properly compute the gain or loss from the sale of the real estate and any related section 1250 recapture. Because if you don't understand my explanation, it's also quite likely that you...