An individual had the following gains and losses during 2010 on property held for the long-term holding period: sale of Orange common stock ($8,000 gain);sale of real property used in the taxpayer's business ($1,800 loss);destruction of real property used in the taxpayer's business by fire ($1,000 loss).Which of the following is correct?

Question

Quizplus · Accepted Answer

The sale of real property used in the taxpayer's business is a § 1231 loss, which means it can be netted against any § 1231 gains, including the gain from the sale of Orange common stock. The destruction of real property used in the taxpayer's business by fire is also a § 1231 loss, but it cannot be used to offset the stock sale gain or the real property sale loss because it is not within the same category of gains and losses. Therefore, only choice D is correct.

An Individual Had the Following Gains and Losses During 2010