Daniel recognizes $35,000 of Sec.1231 gains and $25,000 of Sec.1231 losses during the current year.The only other Sec.1231 item was a $4,000 loss three years ago.This year,Daniel must report

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Daniel has a net Sec.1231 loss of $10,000 ($25,000 - $35,000). However, since he has a previous Sec.1231 loss of $4,000, his current year Sec.1231 loss is reduced to $6,000 ($10,000 - $4,000). Therefore, Daniel must report a Sec.1231 loss of $6,000 on his tax return for the current year, which is option B.

Daniel Recognizes $35,000 of Sec