Which assets are not considered under the classification of 1245 Property?

The classification of 1245 Property pertains primarily to certain types of depreciable property, especially tangible personal property and specific types of intangible assets. The key aspect of this classification is that it encompasses property that is subject to depreciation and is not a part of real property.

Real estate, which includes land and buildings, is not classified under Section 1245. Instead, real estate is generally categorized as Section 1250 property. Section 1250 property is subject to different depreciation rules than Section 1245 property. In contrast, inventory or stock for sale, tangible personal property like machinery and equipment, and intangible assets such as patents or copyrights, are classified as Section 1245 property because they are eligible for depreciation deductions.

Therefore, real estate stands apart from these other property types, as it is subjected to different tax treatments, making this classification distinct and helping to delineate the types of property eligible for certain favorable depreciation methods.