1231 gain is capital gain so it will reduce capital loss carryover. it flows first to 4797 and from there the net (line 9a of the form) flows to line 11 of schedule d. if there were suspended losses upon disposition they are freed up so you get a deduction for them
in effect the $57K 1231 gain is offset by the allowance of $57K of passive losses. look at form 8582
