A net §1231 gain becomes ordinary while a net §1231 loss becomes long-term capital gain.

Question

Quizplus · Accepted Answer

The statement is incorrect. A net §1231 gain is treated as long-term capital gain, while a net §1231 loss is treated as an ordinary loss. This treatment is based on the idea that overall gains from the sale of business assets are more likely to be long-term in nature, while losses are more likely to be short-term in nature.

A Net §1231 Gain Becomes Ordinary While a Net §1231