Classify the gain or loss on each of George's assets listed below using the following codes. Note: a code may be used once, more than once, or not at all.
-After using a house as his personal home for 20 years, George converts it in 2007 to an office building for use in his construction business. He sells the building at a $65,000 loss in 2018.
A)Long-term capital
B)Short-term capital
C)Collectible gain
D)Section 1231
E)Section 1245
F)Section 1250
G)Ordinary income/loss
H)Nontaxable/nondeductible

Question

Quizplus · Accepted Answer

The loss on the sale of the building, which was converted from personal use to business use and then sold, is classified as Section 1231. This section applies to depreciable business property and real property used in a business, where gains can be treated as capital gains and losses as ordinary losses, providing a tax advantage.

Classify the Gain or Loss on Each of George's Assets