Under the rules for nonrecaptured 1231 losses:

	1231 gain is treated as ordinary income until losses from the five prior years are recaptured.
	1231 losses are treated as ordinary losses until gains from the five prior years are recaptured.
	1231 gain is recorded by year and retained for five years to offset 1231 losses incurred over these five future years.
	1231 losses are treated as ordinary losses for five years.