Berkeley Corporation has a policy of furnishing new automobiles to the athletic department of the local university. The automobiles are used for short periods of time by the extremely popular head basketball coach. When the automobiles are returned to Berkeley Corporation, they are sole to regular customers. The owner of Berkeley Corporation maintains that any such cars held for more than one year should qualify as Sec. 1231 property. Do you agree?

The IRS regards Section 1231 properties to include buildings, machinery, land, timber, and other natural resources, unharvested crops, cattle, livestock, and leaseholds that are held in a business or trade for at least one year. They are used in trade and not for sale. On the other hand, Section 1245 properties include all depreciable or amortizable tangible personal property, such as furniture, automobiles, and equipment, or other intangible personal property, such as a patent or license.

topeadeniran2 topeadeniran2 · Answer 2 · 2021-12-09T18:16:23+01:00

Based on the information given, it's not section 1231. Therefore, I do not agree with the owner of Berkeley Corporation.

Section 1231 simply means a term that is used to describe a property relating to the United States Internal Revenue Code. Vehicles or automobiles are section 1245 property and not section 1231.

The Internal Revenue Service regards Section 1231 properties like buildings, machinery, land, timber, and other natural resources, unharvested crops, cattle, livestock, etc. Section 1245 represents properties that are depreciable like furniture, automobiles, equipment, etc.

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