Section 1245 is a part of the IRS code that relates to gain from dispositions of depreciable property. The section states that favorable capital gains tax treatment may be available for a depreciable property sold at a price that exceeded the salvage value, according to Investopedia.
The section applies for personal property and property that has been used as an integral part of production, manufacturing or communication, states Cornell University Law School. Exceptions and limitations are in place, and they include gifts, transfers at death, certain tax-free transactions, exchanges and involuntary conversions. Section 1245 is usually profitable for the sellers, as capital gains taxation rates are generally lower than income tax.