Blair, whose tax rate is 24%, sells one tract of land at a gain of $29,000 and another tract of land at a gain of $11,000. Both tracts of land are Sec. 1231 property. She has never had any other Sec. 1231 transactions. How are the gains taxed?
A) ordinary income of $40,000 taxed at 28%
B) a net capital gain of $40,000 which is not taxed
C) a net capital gain of $40,000 taxed at 15%
D) ordinary income of $40,000 taxed at 25%
C) a net capital gain of $40,000 taxed at 15%
The 1231 gains are treated as LTCG taxed at a maximum of 15%. ($29,000 + $11,000 = $40,000).
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