Section 1231 property receives preferential tax treatment. The preference(s) include(s)
I.Net Section 1231 losses are deductible as short-term capital losses.
II.Net Section 1231 gains are reportable as long-term capital gains.
III.Net Section 1231 losses are deductible as long-term capital losses.
IV.Net Section 1231 losses are deductible as ordinary losses.

Question

Section 1231 property receives preferential tax treatment. The preference(s) include(s)
I.Net Section 1231 losses are deductible as short-term capital losses.
II.Net Section 1231 gains are reportable as long-term capital gains.
III.Net Section 1231 losses are deductible as long-term capital losses.
IV.Net Section 1231 losses are deductible as ordinary losses.
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Quizplus · Accepted Answer

Section 1231 property, which includes depreciable property and real estate used in a business and held for more than one year, offers unique tax advantages. Net Section 1231 gains are treated as long-term capital gains, providing a lower tax rate compared to ordinary income. Conversely, net Section 1231 losses are treated as ordinary losses, which can offset ordinary income fully, offering a more favorable treatment than capital losses that have limitations on their deductibility against ordinary income.

Section 1231 Property Receives Preferential Tax Treatment