An individual had the following gains and losses during 2016 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. The fire loss is also a § 1231 loss but cannot reduce the stock sale gain. Instead, both the stock sale gain and the real property sale loss would be netted against each other to determine the net § 1231 gain or loss for the year.

An Individual Had the Following Gains and Losses During 2016