What is section 1231 property?
The IRC defines section 1231 property as real or depreciable business assets that are held for long-term use (i.e. more than 1 year). A section 1231 gain from the sale of a 1231 property is taxed at the lower capital gains tax rate versus the rate for ordinary income. If the property that was sold was held for less than one year, the 1231 gain does not apply

It is important to understand that the 5-year lookback rule is applicable in the sale of section 1231 property.
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What is the five-year lookback rule for section 1231 assets?
When gains exist from the sale of Section 1231 assets, gains will result in ordinary income to the extent of 1231 losses claimed by the given taxpayer in the previous five years. Any remaining gains left over will result in capital gain treatment.
What is the five-year lookback rule for section 1231 assets?
When gains exist from the sale of Section 1231 assets, gains will result in ordinary income to the extent of 1231 losses claimed by the given taxpayer in the previous five years. Any remaining gains left over will result in capital gain treatment.