An individual had the following gains and losses during 2015 on property held for the long-term holding period: sale of Orange common stock ($8,000 gain);sale of real property used in the taxpayer's business ($1,800 loss);destruction of real property used in the taxpayer's business by fire ($1,000 loss).Which of the following statements is correct?
A)The fire loss would reduce the real property sale loss.
B)The fire loss would reduce the stock sale gain.
C)The sale of real property loss would be netted against the stock sale gain.
D)The sale of real property is a § 1231 loss.
E)None of the above.

Question

Quizplus · Accepted Answer

The sale of real property used in the taxpayer's business is a § 1231 loss, which is a type of capital loss. The fire loss is also a § 1231 loss and can be offset against the real property sale loss, which would reduce the net loss. The gain on the sale of Orange common stock is a capital gain and cannot be offset by the capital losses. Therefore, option A and B are incorrect. Option C is incorrect because the real property sale loss cannot be netted against the stock sale gain.

An Individual Had the Following Gains and Losses During 2015