An individual has the following recognized gains and losses from disposition of § 1231 assets (all the assets were vacant land): $15,000 gain,$10,000 loss,$25,000 gain,and $2,000 loss.The individual has a $5,500 § 1231 lookback loss.The individual also has a $16,000 net short-term capital loss from the disposition of stock.Which of the following statements is correct?
A)The taxpayer has $5,500 ordinary gain and $6,500 net long-term capital gain.
B)The taxpayer has $12,000 net long-term capital gain.
C)The taxpayer has $28,000 ordinary gain and $16,000 net short-term capital loss.
D)The taxpayer has $5,500 ordinary loss and $6,500 net long-term capital gain.
E)None of these.

Question

Quizplus · Accepted Answer

There is a net § 1231 gain of $28,000 ($15,000 - $10,000 + $25,000 - $2,000).$5,500 of the gain is treated as ordinary gain due to the $5,500 § 1231 lookback loss and the balance of $22,500 is treated as a long­ term capital gain.The $22,500 is netted against the $16,000 net short-term capital loss and results in a $6,500 net long-term capital gain.

An Individual Has the Following Recognized Gains and Losses from Disposition