Which of the following is true regarding the §1231 lookback rule?
A)It only applies when a §1231 loss occurs.
B)It only applies when a §1231 gain occurs.
C)It only applies when a §1231 gain occurs and there is a nonrecaptured §1231 loss in the prior five years.
D)It only applies when a §1231 gain occurs and there is a nonrecaptured §1231 gain in the prior five years.
E)None of thesE.The lookback rule only recharacterizes a current year 1231 gain if there are 1231 losses from the prior 5 years.

Question

Quizplus · Accepted Answer

The §1231 lookback rule only applies when a §1231 gain occurs and there is a nonrecaptured §1231 loss in the prior five years. It allows the taxpayer to treat the current year §1231 gain as long-term capital gain instead of ordinary income.

Which of the Following Is True Regarding the §1231 Lookback