Final answer:
The assertion that Section 1245 recaptures as ordinary income the portion of the gain equal to the sale price minus the original cost is false. Section 1245 recaptures as ordinary income the lesser of the gain realized or the accumulated depreciation.
Step-by-step explanation:
The statement that Section 1245 generally recaptures as ordinary income the portion of the gain that is equal to the sale price minus the original cost is false.
In fact, Section 1245 of the Internal Revenue Code recaptures as ordinary income the lesser of the gain realized on the sale, or the accumulated depreciation deductions taken on the property. This recapture applies to depreciable personal property and certain other types of property. If the sale price is greater than the property's original cost, the excess over original cost is treated as capital gain, not ordinary income.