Freds Foam Foundations (FFF) is a sole proprietorship that Fred started in 2006. Before the current year,

Question:

Fred’s Foam Foundations (FFF) is a sole proprietorship that Fred started in 2006. Before the current year, FFF had not disposed of any property it owned. During the current year, FFF has the following gains and losses:
Casualty loss on foam truck .... $3,200
Section 1231 gains ........ 9,400
Section 1231 losses ....... 3,000

What is the effect of these transactions on Fred’s taxable income? Explain, and show the calculations.