During the current year,Danika recognizes a $30,000 Section 1231 gain and a $22,000 Section 1231 loss.Prior to this,Danika's only Section 1231 item was a $15,000 loss two years ago.Danika must report a(n)
A)$8,000 net LTCG.
B)$8,000 ordinary income.
C)$15,000 ordinary income.
D)$8,000 ordinary income and $7,000 net LTCG.

Question

Quizplus · Accepted Answer

Danika has a net Section 1231 gain of $8,000 ($30,000 gain - $22,000 loss). However, due to the $15,000 Section 1231 loss from two years ago, the $8,000 gain is recaptured as ordinary income under the Section 1231 lookback rule.

During the Current Year,Danika Recognizes a $30,000 Section 1231 Gain