Question

Which one of the following is true about Section 1231 assets? Section 1231 assets are treated like capital assets when they produce losses on sale Business property held 1 year or less is considered a Section 1231 asset Section 1231 assets include company stock Section 1231 asset losses must be netted against 1231 asset gains before tax treatment is determined All of the above are false

Answer 1

Section 1231 asset losses must be netted against 1231 asset gains before tax treatment is determined

Step-by-step explanation:

Section 1231 property is a term that describes a form of property, defined by section 1231 of the U.S. Internal Revenue Code. It deals with a real or depreciable business property held for more than one year, such as Land, machines etc.

Section 1231, assets, however, are generally thought to enjoy a tax-favored status because its gains and losses from the sale of a property is taxed at the lower capital gains tax rate compared to the rate for ordinary income.

Hence, in this case, given the options available, it is TRUE that, Section 1231 asset losses must be netted against 1231 asset gains before tax treatment is determined