Ramona recognizes a $50,000 Section 1231 loss, a $30,000 Section 1231 gain, and ordinary income of $35,000 in 2014. Before 2014, Ramona's only Section 1231 transaction was a $15,000 loss reported in 2010. How should Ramona report her 2014 transactions?

Question

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The $15,000 loss from 2010 is first netted against the $30,000 gain from 2014, resulting in a net Section 1231 gain of $15,000. This gain is then combined with the $50,000 loss from 2014, resulting in a net Section 1231 loss of $35,000. This loss is then combined with the ordinary income of $35,000, resulting in a net loss of $0.

Ramona Recognizes a $50,000 Section 1231 Loss, a $30,000 Section