Tax Treatment for Sec. 1231 Sec. 1231 gains are netted against sec 1231 losses Net Gains treated as LTCG Net Losses- Treated as ordinary loss Five year Look-back rule -any net Sec 1231 gain is ordinary to the extent of any nonrecaptured net Sec. 1231 losses from previous five years Tax rate for Sec. 1231 gain could be 20% or 10%Tax Treatment for Sec. 1231 • Sec.1231 gains are netted against Sec. 1231 losses • Net Gains treated as LTCG • Net Losses – Treated as ordinary loss. • Five year Look-back rule – any net Sec. 1231 gain is ordinary to the extent of any nonrecaptured net Sec. 1231 losses from previous five years. • Tax rate for Sec.1231 gain could be 20% or 10%