Tory sells General Electric stock (owned 10 years) for a $40,000 gain in the current year. In addition, she had a loss of $20,000 on the sale of one acre of land used in her trade or business. The land was purchased five years ago. Tory's net Section 1231 gain (loss) for the current year is:

Question

Quizplus · Accepted Answer

The gain on the sale of the General Electric stock is a capital gain, and the loss on the sale of the land used in her trade or business is a Section 1231 loss. To calculate the net Section 1231 gain, we subtract the Section 1231 losses from the Section 1231 gains. In this case, the Section 1231 gain is $40,000 (the gain on the General Electric stock), and the Section 1231 loss is $20,000 (the loss on the land sale). Therefore, the net Section 1231 gain for the current year is $20,000 - $40,000 = $(20,000), which is a net Section 1231 loss. The best choice is C.

Tory Sells General Electric Stock (Owned 10 Years) for a $40,000