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:

Federal Regulations

Rules set forth by government agencies to control activities within various industries and protect public interests.

Total Leverage

A measure of a company's combined use of financial and operational leverage.

Operating Leverage

A financial measure of a firm's fixed versus variable costs, which assesses how revenue growth translates into growth in operating income.

Financial Leverage

The use of borrowed funds to increase the potential return on investment.