During 2013,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?
A)$5,000 capital loss.
B)$5,000 Section 1231 gain.
C)$5,000 ordinary income.
D)$17,000 ordinary income and $12,000 capital loss.
E)$20,000 ordinary income and $15,000 capital loss.

Question

Quizplus · Accepted Answer

The net Section 1231 loss is $15,000 ($10,000 gain - $25,000 loss), which is treated as an ordinary loss. This offsets the $20,000 ordinary income, resulting in $5,000 ordinary income.

During 2013,Ester Recognizes a $10,000 Section 1231 Gain,a $25,000 Section