Paul Has a $45,000 Net Section 1231 Gain in the Current

question 66

Multiple Choice

Paul has a $45,000 net Section 1231 gain in the current tax year from his only property transaction.Last year he had a $12,000 net Section 1231 gain, but two years ago he had a $51,000 net Section 1231 loss.If he has no other property transactions in the current year, how will Paul treat his net Section 1231 gains this year?

• A)$45,000 long-term capital gain
• B)$45,000 ordinary income
• C)$39,000 ordinary income; $6,000 Section 1245 gain
• D)$39,000 ordinary income; $6,000 long-term capital gain

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