Which of the following is correct?
A) Improperly classifying a § 1231 loss as a capital loss might affect adjusted gross income.
B) Improperly classifying a capital loss as a § 1231 loss might affect adjusted gross income.
C) Misclassifying a § 1231 gain as a short-term capital gain might affect adjusted gross income.
D) Misclassifying a short-term capital gain as a § 1231 gain might affect adjusted gross income.
E) All of the above.

Question

Quizplus · Accepted Answer

All of the above statements are correct. Improperly classifying a § 1231 loss as a capital loss, or vice versa, can affect adjusted gross income because they are taxed differently. Additionally, misclassifying a § 1231 gain as a short-term capital gain, or vice versa, can also affect adjusted gross income. Therefore, option E is the correct choice.

Which of the Following Is Correct