Section 1250

A section of the IRS code stating that a gain from selling real estate that has been subjected to accelerated depreciation should be treated as ordinary income instead of a capital gain.

Investopedia Says:
Generally capital gains taxation rates are more favorable than income tax.

Related Links:
Investors would be wise to consider the impact of the government's cut on their returns. Learn ways to minimize it. A Long-Term Mindset Meets Dreaded Capital-Gains Tax
Companies make choices and assumptions in calculating depreciation, and you need to know how these affect the bottom line. Appreciating Depreciation

The section of the internal revenue code dealing with gains from real estate on which accelerated depreciation had been claimed. Since 1986, straight-line depreciation is mandated for most buildings. Consequently, the importance of Section 1250 has been minimized. Under prior law, gains on residential property were generally treated as capital gains except to the extent of accelerated depreciation claimed. For depreciable real estate sold after July 29, 1997, long-term capital gain that would be treated as ordinary income if the property were depreciable personal property (Code Section 1245) is taxed at a maximum rate of 25%. The remaining amount of long-term capital gain is taxed at a maximum rate of 15% after May 6, 2003.