The §1231 Look-Back Rule Recharacterizes §1231 Gains If §1231 Losses

question 72

True/False

The §1231 look-back rule recharacterizes §1231 gains if §1231 losses have created ordinary losses in the last 5 years.

---

Definitions:

Cash Payback Period

The time period required for the returns from an investment to repay the initial capital outlay.

Annual Net Cash Flows

This term refers to the amount of money that flows in and out of a business over a year after all expenses have been accounted for.

Expected Total Cash Flows

An estimation of all cash inflows and outflows associated with an investment over its expected life, used to gauge its profitability.

Average Rate of Return

A financial ratio indicating the average annual return earned through an investment over its lifetime, expressed as a percentage of the initial investment cost.