b. Assuming that Boyli has $6,000 nonrecaptured net 1231 losses from prior years, how much of the 2014 recognized gains is treated as capital gains? Solution Asset            Cost         Acquired             Dep                Adjusted basis          sold              gain/loss production Equipment    105,000       10/10/11           70,000                 $35,000              $55,000                $20,000 Van                 46,000         10/16/10           21,000                $15,000              $25,000                 ($10,000) The gain on equipment of $20,000 is recaptured ordinary income under sec 1245 / 1250 The loss of $10,000 is sec 1231 loss. thus $10,000 net ordinary gain. b) the net ordinary gain for the year 2014 is $10,000 . There is no net sec 1231 gain , so the $6000 sec 1231 unrecaptured lookback does not affect the character of the current year\'s gain. .

1. b. Assuming that Boyli has $6,000 nonrecaptured net 1231 losses from prior years, how much of
the 2014 recognized gains is treated as capital gains?
Solution
Asset Cost Acquired Dep Adjusted basis sold
gain/loss
production
Equipment 105,000 10/10/11 70,000 $35,000 $55,000
$20,000
Van 46,000 10/16/10 21,000 $15,000 $25,000
($10,000)
The gain on equipment of $20,000 is recaptured ordinary income under sec 1245 / 1250
The loss of $10,000 is sec 1231 loss. thus $10,000 net ordinary gain.
b) the net ordinary gain for the year 2014 is $10,000 . There is no net sec 1231 gain , so the
$6000 sec 1231 unrecaptured lookback does not affect the character of the current year's
gain.