During 2019, an individual had the following gains and losses on property held for the long-term holding period: sale of Orange common stock ($8,000 gain); sale of real property used in the taxpayer's business ($1,800 loss); destruction of real property used in the taxpayer's business by fire ($1,000 loss).Which of the following statements is correct?
A)The fire loss would reduce the real property sale loss.
B)The fire loss would reduce the stock sale gain.
C)The sale of real property loss would be netted against the stock sale gain.
D)The sale of real property is a § 1231 loss.
E)None of these.

Question

Quizplus · Accepted Answer

The sale of real property used in the taxpayer's business is a § 1231 loss, which means it is treated as a long-term capital loss. The destruction of real property used in the taxpayer's business by fire is also a § 1231 loss and can be netted against the gain from the sale of the Orange common stock. However, it cannot be netted against the loss from the sale of the real property because that is already a long-term capital loss.

During 2019, an Individual Had the Following Gains and Losses