Which of the following is true regarding the §1231 look-back rule?
A. It only applies when a §1231 loss occurs.
B. It only applies when a §1231 gain occurs.
C. It only applies when a §1231 gain occurs and there is a nonrecaptured §1231 loss in the prior five years.
D. It only applies when a §1231 gain occurs and there is a nonrecaptured §1231 gain in the prior five years.
E. None of these.
Answer: C. It only applies when a §1231 gain occurs and there is a nonrecaptured §1231 loss in the prior five years.