Ashburn reported a $104,875 net §1231 gain in Year 6. Assuming Ashburn reported $52,500 of nonrecaptured §1231 losses during Years 1 to 5, what amount of Ashburn's net §1231 gain for Year 6, if any, is treated as ordinary income?
A)$0.
B)$52,375.
C)$52,500.
D)$104,875.
E)None of the choices are correct.

Question

Quizplus · Accepted Answer

The amount of Ashburn's net §1231 gain for Year 6 that is treated as ordinary income is $52,500. This is because nonrecaptured §1231 losses from the previous five years offset the current year's §1231 gains, converting an equivalent amount of the gains into ordinary income.

Ashburn Reported a $104,875 Net §1231 Gain in Year 6