Vertical, Inc, has a 2017 net § 1231 gain of $67,000 and had a $22,000 net § 1231 loss in 2016 . For 2017, Vertical's net § 1231 gain is treated as:
a. $45,000 long-term capital gain and $22,000 ordinary loss.
b. $67,000 ordinary gain.
c. $45,000 long-term capital gain and $22,000 ordinary gain.
d. $67,000 capital gain.
e. None of the above.
c
RATIONALE: The 2016 § 1231 loss is a lookback loss and converts $22,000 of the 2017 net § 1231 gain into ordinary gain. The $45,000 remaining of the $67,000 2017 net § 1231 gain is treated as long-term capital gain.
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