Question

If the disposition of depreciable property and real property used in business results in a net loss, § 1231 treats the loss as a capital loss.

a) True
b) False

Answer 1

The disposition of depreciable property and real property used in business results in a Section 1231 loss, not a capital loss.

Step-by-step explanation:

False.

When the disposition of depreciable property or real property used in a business results in a net loss, it is treated as a Section 1231 loss, not a capital loss.

A Section 1231 loss is a special tax treatment under the Internal Revenue Code. It refers to losses from the sale or exchange of property used in a trade or business.

Section 1231 losses can be deducted against ordinary income, which can provide a tax advantage.