Question

Gain or loss on the sale of the following property might be recharacterized under Code Sec. 1231: The gain on the sale of a backhoe used in taxpayer's construction business. The loss on the sale of stock owned by taxpayer for six months. The loss on the condemnation of a building lot purchased by the taxpayer 10 years ago and held for investment. Both A and B. Both A and C.

Answer 1

Throughout the revenue generation code section 1231, 1231 assets were specified in the revenue generation section 1231. Elsewhere there is further clarification provided.

Step-by-step explanation:

• The loss suffered should be considered as something of an ordinary loss which can be excluded from either the taxable income of the individual, as this is thus advantageous since it is 100% exempt again from the tax liability of the individual.
• Inventories weren't included throughout the 1234 clauses, nevertheless, and as such the losses mostly on stock kept during 6 months also aren't protected by the 1234 rules and therefore must be recognized as a regular loss of operation.
• The income earned from either the property where impairment is claimed as either a regular business loss throughout section 1234 could be calculated as deep-term losses or capital gains unless the income increases the value of the loss reported throughout section 1234.