7.

[The following information applies to the questions displayed below.] Hans runs a sole proprietorship. Hans reported the following net 1231 gains and losses since he began business: (Leave no answer blank. Enter zero if applicable.)

	Net 1231
Year	Gains/(Losses)
Year 1	$(73,500)
Year 2	19,250
Year 3	0
Year 4	0
Year 5	13,400
Year 6	0
Year 7 (current year)	54,250

a. What amount, if any, of the year 7 (current year) $54,250 net 1231 gain is treated as ordinary income?

Ordinary income

?

b. Assume that the $54,250 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?

Ordinary income

?