Snapz, LP was formed in 2012 and adopted a calendar tax year. Here is a schedule

Question

Snapz, LP was formed in 2012 and adopted a calendar tax year. Here is a schedule of Snapz's net Section 1231 gains and (losses) reported on its tax returns through 2017.    2012 2013 2014 2015 2016 2017 (2,000) 4,000 (12,250) (1,080) -0- 1,300 In 2018, Snapz recognizes a $24,750 gain on the sale of business land. How is this gain characterized on Snapz's 2018 tax return (portion of the amount ordinary and capital)?

Ordinary Income __________________________________________

Capital Gain _____________________________________________ _______________________________________________________________________________

Explanation / Answer

Firstly loss of 2014 to the extent of 3000 will be adjusted with income of 2018.

Hence net income of 2018 will be 24750-3000=21750.

Since the business land is a capital asset, the entire amount of 21750 will be taxed as capital gain in tax return of 2018.

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