During 2016,Ester recognizes a $10,000 Section 1231 gain,a $25,000 Section 1231 loss,and ordinary income of $20,000.What are the results of Ester's netting of these items?

Question

Quizplus · Accepted Answer

To net the Section 1231 gain and loss, we subtract the loss from the gain:
$10,000 - $25,000 = ($15,000) Section 1231 loss

This loss is then netted with the ordinary income:
$20,000 - $15,000 = $5,000 ordinary income.

Therefore, the result of netting these items is $5,000 of ordinary income.

During 2016,Ester Recognizes a $10,000 Section 1231 Gain,a $25,000 Section