Evon Corporation, which was formed in 2011, had $50,000 of net Sec. 1231 gain for its 2014 calendar year. Its net Sec. 1231 gains and losses for its three preceding tax years were as follows:
Year / Sec. 1231 results
2011 / Gain of $10,000
2012 / Loss of $15,000
2013 / Loss of $20,000
As a result, Evon Corporation's 2014 net Sec. 1231 gain would be characterized as
a. A net long-term capital gain of $50,000
b. A net long-term capital gain of $35,000 and ordinary income of $15,000
c. A net long-term capital gain of $25,000 and ordinary income of $25,000
d. A net long-term capital gain of $15,000 and ordinary income of $35,000
Answer: D
CPA Exam
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