Vertical,Inc. ,has a 2016 net § 1231 gain of $67,000 and had a $22,000 net § 1231 loss in 2015.For 2016,Vertical's net § 1231 gain is treated as:
A)$45,000 long-term capital gain and $22,000 ordinary loss.
B)$67,000 ordinary gain.
C)$45,000 long-term capital gain and $22,000 ordinary gain.
D)$67,000 capital gain.
E)None of the above.

Question

Quizplus · Accepted Answer

Net § 1231 gain is treated as long-term capital gain to the extent that there are any net capital gains. Therefore, $45,000 of the net § 1231 gain ($67,000 - $22,000) will be treated as long-term capital gain and the remaining $22,000 will be treated as ordinary income.