Trojan Inc. was incorporated in 2015. In 2015, it had no Section 1231 transactions. In 2016, Trojan had a net Section 1231 loss of $35,000. In 2017, Trojan had a net Section 1231 gain of $10,000. In 2018 Trojan has a $50,000 net Section 1231 gain. Trojan should treat the 2018 gain as
A)An ordinary gain of $40,000.
B)A long-term capital gain of $50,000.
C)An ordinary gain of $35,000 and a long-term capital gain of $15,000.
D)An ordinary gain of $25,000 and a long-term capital gain of $25,000.
E)An ordinary gain of $15,000 and a long-term capital gain of $35,000.

Question

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The Answer of Trojan Inc. was incorporated in 2015. In 2015, it had no Section 1231 transactions. In 2016, Trojan had a net Section 1231 loss of $35,000. In 2017, Trojan had a net Section 1231 gain of $10,000. In 2018 Trojan has a $50,000 net Section 1231 gain. Trojan should treat the 2018 gain as
A)An ordinary gain of $40,000.
B)A long-term capital gain of $50,000.
C)An ordinary gain of $35,000 and a long-term capital gain of $15,000.
D)An ordinary gain of $25,000 and a long-term capital gain of $25,000.
E)An ordinary gain of $15,000 and a long-term capital gain of $35,000.