In 2012, Joe purchased land for $73,500 for use in his business. He sold it in 2015 for $100,000. What is the gain on the sale before any netting?

Question

Quizplus · Accepted Answer

Section 1231 of the Internal Revenue Code applies to gains and losses from the sale or exchange of property used in a trade or business. Since Joe purchased the land for use in his business, it qualifies as Section 1231 property. The gain on the sale, calculated as selling price minus the purchase price, is $100,000 - $73,500 = $26,500. Since it is a gain on Section 1231 property, it is classified as a Section 1231 gain.

In 2012, Joe Purchased Land for $73,500 for Use in His