Introduction When you dispose of business property, your taxable gain or loss isusually a section 1231 gain or loss. Its treatment as ordinary orcapital is determined under rules for section 1231 transactions. When you dispose of depreciable property (section 1245 property orsection 1250 property) at a gain, you may have to recognize all orpart of the gain as ordinary income under the depreciation recapturerules. Any remaining gain is a section 1231 gain.