Hugo Inc.,a calendar year taxpayer,sold two operating assets this year.The first sale generated a $38,700 Section 1231 gain,and the second sale generated a $59,400 Section 1231 loss.As a result of these sales,Hugo should recognize:
A)$20,700 ordinary loss
B)$38,700 Section 1231 gain treated as capital gain and $59,400 ordinary loss
C)$20,700 capital loss
D)None of the above

Question

Quizplus · Accepted Answer

The net result of the Section 1231 transactions is a loss of $20,700 ($38,700 gain - $59,400 loss), which is treated as an ordinary loss.

Hugo Inc,A Calendar Year Taxpayer,sold Two Operating Assets This Year