In 2018, Mary recognized a $45,000 gain on the sale of Section 1231 property. Over the previous five-year period, Mary recognized the following net Section 1231 gains and (losses):
2017 ($28,000)
2016 $16,000
2015 ($30,000)
Mary's 2018 gain is characterized as

Question

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$16,000 of the 2015 loss was recaptured against the 2016 gain. The remaining $14,000 2015 loss and the 2017 loss of $28,000 must be recaptured against the 2018 gain, producing $42,000 of ordinary income. The remaining $3,000 2018 gain will be treated as a capital gain.

In 2018, Mary Recognized a $45,000 Gain on the Sale