I got K1 (1120S) from a business which I sold in 2016. The gain from the sales proceed is attributed to Net section 1231 gain (9 in 1120S). When I entered this amount to TT, the federal tax increases by 22.5% of the gain. This is way higher than I expected. Why isn't the 1231 gain fully recognized as LT capital gain? If it is, the rate should be close to 15%, right? CPA who handled the business transaction said the whole amount should be considered as capital gain and I hold the interest more than a year.
