Section 1231 of the Internal Revenue Code explains how taxpayers should deal with non-recaptured losses and gains. 

Under Code Section 1231(c), net Section 1231 gain for a tax year is treated as ordinary income to the extent of non-recaptured net Section 1231 losses (if any) for the five most recent preceding tax years.  If any amount is treated as ordinary income under Code Sec. 1231(c), that amount is to be allocated among the categories of net Section 1231 gain as indicated in IRS forms or regulations.