Ashburn reported a $105,000 net §1231 gain in year 6. Assuming Ashburn reported $60,000 of nonrecaptured §1231 losses during years 1-5, what amount of Ashburn's net §1231 gain for year 6, if any, is treated as ordinary income?
A) $0.
B) $45,000.
C) $60,000.
D) $105,000.
E) None of these.

Question

Quizplus · Accepted Answer

The nonrecaptured §1231 losses from previous years must be recaptured as ordinary income to the extent of the current year's §1231 gain. Therefore, $60,000 of the $105,000 gain is treated as ordinary income.

Ashburn Reported a $105,000 Net §1231 Gain in Year 6