Asset dispositions & character — EA Part 2 Widgets

What this does

How to read it Visual: stacked character of the gain — ordinary slice vs capital remainder.

Compute amount realized − basis = gain, then sketch how much might be ordinary under §1245 recapture vs §1231/capital.

Visual: stacked character of the gain — ordinary slice vs capital remainder.

Gain / loss builder

Cash received Liability relief FMV of other property received Adjusted basis Depreciation / §179 previously taken

Realized gain

—

Character split shown below — ordinary recapture vs §1231/capital remainder.

Gain character stack

Ordinary (§1245 sketch) §1231 / capital remainder

Amount realized

—

Realized gain

—

Ordinary (recapture sketch)

—

§1231 / capital remainder

—

Exam trap: Amount realized includes liability relief. §1245 recapture turns gain into ordinary to the extent of depreciation/§179. Don’t forget selling expenses reduce amount realized.

← All widgets Diagnostic home

Study tool only — not official IRS software. Figures labeled 2025 track law/forms through Dec 31, 2025. Confirm against current IRS pubs before the exam.