Question

For purposes of this subsection, the term 'net section 1231 gain' means the excess of the section 1231 gains, over the section 1231 losses. What is the definition of 'net section 1231 gain'?

1) The excess of section 1231 gains over section 1231 losses
2) The excess of section 1231 losses over section 1231 gains
3) The sum of section 1231 gains and section 1231 losses
4) The difference between section 1231 gains and section 1231 losses

Answer 1

Net section 1231 gain refers to the excess of the section 1231 gains over section 1231 losses, which is the correct answer to the given options.

Step-by-step explanation:

The definition of 'net section 1231 gain' refers to the excess of section 1231 gains over section 1231 losses. Therefore, the correct option is 1) The excess of section 1231 gains over section 1231 losses. To clarify, section 1231 of the U.S. tax code pertains to the tax treatment of certain types of properties, including depreciation recapture on real or depreciable property used in a business and held for more than one year. A section 1231 gain occurs when the sale of such property exceeds its adjusted basis, while a section 1231 loss occurs when the adjusted basis exceeds the sale amount. The 'net' part of the term is simply the computation of gains minus any losses, leading to either a net gain or net loss for the tax year concerned.