Orange,Inc.,has a 2011 net § 1231 gain of $45,000 and had a $72,000 net § 1231 loss in 2010.For 2011,Orange's net § 1231 gain is treated as:

Question

Quizplus · Accepted Answer

Net § 1231 gains are treated as ordinary income unless there is a net § 1231 loss in the prior year. Since Orange had a net § 1231 loss of $72,000 in 2010, the $45,000 net § 1231 gain in 2011 is treated as an ordinary gain. Therefore, the correct answer is B) $45,000 ordinary gain.