A Calendar-Year Taxpayer Had Net Code Sec

question 103

Multiple Choice

A calendar-year taxpayer had net Code Sec. 1231 losses of $8,000 in 2010. He had net Code Sec. 1231 gains of $5,250 and $4,600 in 2011 and 2012, respectively. ftere were no net Code Sec. 1231 losses in 2007, 2008, and 2009. What portion of the net Code Sec. 1231 gain is reported as ordinary income, and what portion is considered long-term capital gain in 2012?

• A) $5,250 is reported as ordinary income; no portion is treated as long-term gain.
• B) No long-term capital gain is reported and $3,400 is reported as ordinary income.
• C) $2,750 is reported as ordinary income and $1,850 is reported as long-term capital gain.
• D) $2,150 is reported as long-term capital gain and $2,400 is reported as ordinary income.