Question

Daniel recognizes $35,000 of Sec. 1231 gains and $25,000 of Sec. 1231 losses during the current year. The only other Sec. 1231 item was a $4,000 loss three years ago. This year, Daniel must reportNote-Please give the necessary description for my quick understanding!A)NLTCG Ordinary Income$10,000 $0B)NLTCG Ordinary Income$6,000 $4,000C)NLTCG Ordinary Income$4,000 $6,000D)NLTCG Ordinary Income$4,000 $10,000

Answer 1

B) NLTCG Ordinary Income$6,000 $4,000

Step-by-step explanation:

The 4000 is considered a non re- captured net sec 1231 loss.

Thus of the net sec 1231 gain of 10000(35000 - 25000) 4000 is ordinary income.

NLTCG is 6000 (10000 - 4000).