1. Jeraldine believes that when the §1231 look-back rule applies, the taxpayer de- ducts a §1231 loss in a previous year against §1231 gains in the current year. Explain whether Jeraldine's description is correct.
2. Explain the purpose behind the §1231 look-back rule.
3. Does a taxpayer apply the §1231 look-back rule in a year when the taxpayer recognizes a net §1231 loss? Explain.