Business

Question

Hugo Inc., a calendar year taxpayer, sold two operating assets this year. The first sale generated a $38,700 Section 1231 gain, and the second sale generated a $59,400 Section 1231 loss. As a result of these sales, Hugo should recognize: Multiple Choice $20,700 ordinary loss $38,700 Section 1231 gain treated as capital gain and $59,400 ordinary loss $20,700 capital loss None of these choices are correct

1 Answer

  • Answer:

    $20,700 ordinary loss

    Explanation:

    Based on the information given if the first Operating assets generated a gain of the amount of $38,700 while the second assets generated a loss of the amount of $59,400 after been sold out which indicate or means that Hugo should recognize the amount of $20,700 ORDINARY LOSS which is calculated as :

    Ordinary loss =-$59,400+$38,700

    Ordinary loss =-$20,700

    Therefore As a result of these sales, Hugo should recognize:$20,700 ORDINARY LOSS

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