Daniel recognizes $35,000 of Sec. 1231 gains and $25,000 of Sec. 1231 losses during the current year. The only other Sec. 1231 item was a $4,000 loss three years ago. This year, Daniel must report
A) $$\begin{array} { | l | l | }
\hline \text { NLTCG } & \text { OrdinaryIncome } \
\hline\$ 10,000 & \$ 0 \
\hline
\end{array}$$
B) $$\begin{array} { | l | l | }
\hline \text { NLTCG } & \text { OrdinaryIncome } \
\hline \$ 6,000 & \$ 4,000 \
\hline
\end{array}$$
C) $$\begin{array} { | l | l | }
\hline \text { NLTCG } & \text { OrdinaryIncome } \
\hline \$ 4,000 & \$ 6,000 \
\hline
\end{array}$$
D) $$\begin{array} { | l | l | }
\hline \text { NLTCG } & \text { OrdinaryIncome } \
\hline \$ 4,000 & \$ 10,000 \
\hline
\end{array}$$

Question

Daniel recognizes $35,000 of Sec. 1231 gains and $25,000 of Sec. 1231 losses during the current year. The only other Sec. 1231 item was a $4,000 loss three years ago. This year, Daniel must report
A) $$\begin{array} { | l | l | } 
\hline \text { NLTCG } & \text { OrdinaryIncome } \
\hline\$ 10,000 & \$ 0 \
\hline
\end{array}$$
B) $$\begin{array} { | l | l | } 
\hline \text { NLTCG } & \text { OrdinaryIncome } \
\hline \$ 6,000 & \$ 4,000 \
\hline
\end{array}$$
C) $$\begin{array} { | l | l | } 
\hline \text { NLTCG } & \text { OrdinaryIncome } \
\hline \$ 4,000 & \$ 6,000 \
\hline
\end{array}$$
D) $$\begin{array} { | l | l | } 
\hline \text { NLTCG } & \text { OrdinaryIncome } \
\hline \$ 4,000 & \$ 10,000 \
\hline
\end{array}$$

Quizplus · Accepted Answer

Daniel has a net Sec. 1231 gain of $10,000 ($35,000 gains - $25,000 losses). The $4,000 loss from three years ago is recaptured as ordinary income, leaving $6,000 as net long-term capital gain (NLTCG).

Daniel Recognizes $35,000 of Sec NLTCG OrdinaryIncome $10,000$0\begin{array} { | l | l | } \hline \text { NLTCG } & \text { OrdinaryIncome } \\\hline\$ 10,000 & \$ 0 \\\hline\end{array} NLTCG $10,000​ OrdinaryIncome $0​​

Daniel Recognizes $35,000 of Sec $\begin{array} { | l | l | } \hline \text { NLTCG } & \text { OrdinaryIncome } \\\hline\$ 10,000 & \$ 0 \\\hline\end{array}$