Ashburn Reported a $105,000 Net §1231 Gain in Year 6

question 89

Multiple Choice

Ashburn reported a $105,000 net §1231 gain in year 6. Assuming Ashburn reported $60,000 of nonrecaptured §1231 losses during years 1-5, what amount of Ashburn's net §1231 gain for year 6, if any, is treated as ordinary income?

• A) $0.
• B) $45,000.
• C) $60,000.
• D) $105,000.
• E) None of these.

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Definitions:

Direct Expense

Costs that can be directly attributed to the production of specific goods or services, such as raw materials and labor.

Electricity

Form of energy resulting from the existence of charged particles, used for power and lighting.

Stove

A heating appliance used for cooking and heating, operating with various fuel sources like gas, electricity, or wood.

Depreciation

The systematic allocation of a tangible asset's cost over its useful life, reflecting wear and use over time.