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In 2014, Big Company had a net 1231 loss of $20,000. In 2015, Big Company had...

In 2014, Big Company had a net 1231 loss of $20,000. In 2015, Big Company had a net 1231 loss of $5,000. In 2016, Big Company had a net 1231 gain of $10,000. In 2017, Big Company has a net 1231 gain of $25,000. How much ordinary income (if any) does Big Company report for 2017?

Group of answer choices

$5,000

$0

$20,000

$15,000

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Homework Answers

Answer #1

Answer:

Option B is correct.

2014 = loss 20000

2015 = loss 5000

2016 = gain 10000 (in this year 10000 loss of year 2014 is adjusted) so total income =0

2017 = gain 25000 (in this year 5000 loss of 2015 will be adjusted) so

ordinary income = 25000 - 5000

=20000

Note remaing loss of 10k will not be carry forward after 2016.

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