Question

The results of UNA Corporation's first six years of operations are presented below.

Year Results of Operations
1 Section 1231 losses of 50,000
2 Section 1231 losses of30,000
3 Section 1231 gains of 75,000
4 Section 1231 losses of20,000
5 Section 1231 losses of 30,000
6 Section 1231 gain of80,000

UNA corporation's year-six Section 1231 gain can best be characterized as
1) 80,000 Section 1231 gain.
2) 50,000 ordinary income; 30,000 Section 1231 gain.
3) 80,000 ordinary income.
4) 55,000 ordinary income; 25,000 Sec. 1231 gain.

Answer 1

The year-six Section 1231 gain of UNA Corporation can be characterized as $80,000 ordinary income.

Step-by-step explanation:

The year-six Section 1231 gain of UNA Corporation can best be characterized as option 3) 80,000 ordinary income. A Section 1231 gain is treated as ordinary income for tax purposes. Therefore, the gain of $80,000 in year six would be considered ordinary income for UNA Corporation.