Benlow Company, a calendar year taxpayer, sold two operating assets this year (each held for over a year). The first sale generated a $19,200 Section 1231 loss, and the second sale generated a $33,600 Section 1231 gain. As a result of these sales, Benlow should recognize:

Question

Quizplus · Accepted Answer

When calculating the net Section 1231 gain or loss for the year, the Section 1231 losses are netted against the Section 1231 gains. In this case, the net Section 1231 gain is $14,400 ($33,600 - $19,200). This amount is treated as long-term capital gain. Therefore, choice B is correct. Choice A is incorrect because only the net amount is treated as long-term capital gain, not both amounts separately. Choice C is incorrect because it implies that the entire amount is ordinary income, which is not the case for Section 1231 gains. Choice D is incorrect because one of the choices is correct.

Benlow Company, a Calendar Year Taxpayer, Sold Two Operating Assets