In 2011, Jim had a $5,000 net Section 1231 gain. In 2013, Jim reported a Section 1231 loss of $12,000. In 2014, Jim has a $15,000 net Section 1231 gain. He had no other sales of property in 2014. What is Jim's ordinary income from his 2014 property transactions?

Question

Quizplus · Accepted Answer

Jim's 2013 Section 1231 loss of $12,000 must be recaptured as ordinary income against his 2014 gain. Therefore, $12,000 of the $15,000 gain in 2014 is treated as ordinary income.

In 2011, Jim Had a $5,000 Net Section 1231 Gain