The Section 1231 look-back rule indicates that when a taxpayer recognizes a net Section 1231 gain for a year, the taxpayer must look-back to the -year period preceding the current year to determine if there are any unrecaptured Section 1231 losses. If there are losses, the Section 1231 gain in the current year must be recharacterized as   to the extent of the unrecaptured loss.

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