Davidson Corporation has the following gains and losses from Section 1231 property during 2018:
?
$$\begin{array} { l c }
\text { Casualty losses } & \$ ( 6,000 ) \
\text { Casualty gains } & 7,000 \
\text { Section } 1231 \text { gains } & 6,000 \
\text { Section } 1231 \text { losses } & ( 9,000 )
\end{array}$$
No net Section 1231 losses have been deducted as ordinary losses in prior years. How much of the 2018 Section 1231 gains and losses are recognized as long-term capital gains?
A)$- 0 -
B)$1,000
C)$2,000
D)$3,000
E)$6,000

Question

Davidson Corporation has the following gains and losses from Section 1231 property during 2018:
?
$$\begin{array} { l c } 
\text { Casualty losses } & \$ ( 6,000 ) \
\text { Casualty gains } & 7,000 \
\text { Section } 1231 \text { gains } & 6,000 \
\text { Section } 1231 \text { losses } & ( 9,000 )
\end{array}$$
No net Section 1231 losses have been deducted as ordinary losses in prior years. How much of the 2018 Section 1231 gains and losses are recognized as long-term capital gains?
A)$- 0 -
B)$1,000
C)$2,000
D)$3,000
E)$6,000

Quizplus · Accepted Answer

The net Section 1231 gain is $2,000 ($7,000 + $6,000 - $9,000 - $6,000). This gain is recognized as long-term capital gain.

Davidson Corporation Has the Following Gains and Losses from Section