Lenny's Landing has a net Section 1231 gain in the current year of $12,000. In the previous five years, there are $3,000 in unre

Question

tino4ka555 [31]

3 years ago

11

Lenny's Landing has a net Section 1231 gain in the current year of $12,000. In the previous five years, there are $3,000 in unre

captured Section 1231 losses. How will Lenny's gain be taxed in the current year

Business

1 answer:

Ratling [72] · Answer 1 · 2022-07-16T15:32:55+03:00

Answer:

As the $3,000 is unrecaptured losses, it will be carried forward to this year and would be set off against the current year's capital gains.

Explanation:

The previous year unrecaptured loss of $3000 will carried forward and would be set off against the capital gains of $12,000. The gain for the year can be calculated as under:

Capital Gain for the year = Gain Before unrecaptured losses - Carried Forward Losses

By putting values, we have:

Capital Gain for the year = $12,000 - $3,000 = $9,000

The resultant $9,000 would be the capital gain for the year.