In 2010,Jim had a $5,000 net Section 1231 gain.In 2012,Jim reported a Section 1231 loss of $12,000.In 2013,Jim has a $15,000 net Section 1231 gain.He had no other sales of property in 2013.What is Jim's ordinary income from his 2013 property transactions?
A)$ - 0 -
B)$ 7,000
C)$ 3,000
D)$12,000
E)$15,000

Question

Quizplus · Accepted Answer

Jim's 2012 Section 1231 loss of $12,000 is recaptured as ordinary income in 2013 because he has a net Section 1231 gain of $15,000 in 2013. The recapture rule requires that the gain be treated as ordinary income to the extent of the unrecaptured Section 1231 losses from the previous five years.

In 2010,Jim Had a $5,000 Net Section 1231 Gain