Under 1231(c), the 1231 gain that was deferred until the second year in the example above will be recharacterized as ordinary income. This is done because the taxpayer has already received the benefit of having the loss in year one treated as an ordinary loss. Thus, if the 1231 gain is disposed of after year one, but before what becomes the seventh year under 1231(c)(2)(A), it will receive ordinary income treatment. If held onto and disposed of after the seventh year, it may be treated as a capital gain.