Han runs a sole proprietorship. Hans reported the following net §1231 gains and losses since he began business:
Year ________________________ Net §1231 Gains/(Losses)
Year 1 ......................................... ($65,000)
Year 2 ......................................... 15,000
Year 3 ......................................... 0
Year 4 ......................................... 0
Year 5 ......................................... 10,000
Year 6 ......................................... 0
Year 7 (current year) ........................ 50,000
a. What amount, if any, of the year 7 (current year) $50,000 net §1231 gain is treated as ordinary income?
b. Assume that the $50,000 net §1231 gain occurs in year 6 instead of year 7. What amount of the gain would be treated as ordinary income in year 6?