Final answer:
Section 1250 recapture refers to the tax provision that deals with the recapture of depreciation on real estate properties.
Step-by-step explanation:
In tax law, Section 1250 refers to a provision that deals with recapturing depreciation on real estate properties. When a taxpayer sells a property that has been depreciated under the Modified Accelerated Cost Recovery System (MACRS), any gain from the sale may be subject to recapture under Section 1250.
The recapture of Section 1250 depreciation occurs when the selling price exceeds the property's adjusted basis. The difference between the sale price and the property's adjusted basis is referred to as the recapture amount.
To calculate the recapture amount, the taxpayer must subtract the property's adjusted basis from the selling price. The recapture amount is then taxed as ordinary income, subject to a maximum tax rate of 25%.