ExpertHard1 markMultiple Choice
CPA · Question 59 · Area IV: Individual Taxation
A taxpayer has a $3,000 short-term capital loss carryover from the prior year. In the current year, the taxpayer has a $12,000 long-term capital gain and a $15,000 short-term capital loss. What is the taxpayer's deductible capital loss for the current year?
A taxpayer has a $3,000 short-term capital loss carryover from the prior year. In the current year, the taxpayer has a $12,000 long-term capital gain and a $15,000 short-term capital loss. What is the taxpayer's deductible capital loss for the current year?
Answer options:
A.
$3,000
B.
$6,000
C.
$0
D.
$15,000
How to approach this question
Net everything. If net loss, deduct up to $3,000 against ordinary income.
Full Answer
A.$3,000✓ Correct
Total STCL = $15,000 + $3,000 = $18,000. Net against LTCG of $12,000 = Net Capital Loss of $6,000. Individuals can deduct up to $3,000 of net capital loss against ordinary income per year.
Common mistakes
Forgetting the $3,000 annual limitation.
Practice the full CPA REG Practice Exam 5
72 questions · hints · full answers · grading
More questions from this exam
Q01A CPA is representing a client, TechSolutions Inc., in an IRS examination regarding a large resea...HardQ02A tax return preparer is engaged to prepare a return for a client who has engaged in a transactio...HardQ03Which of the following statements accurately describes the disciplinary authority of a State Boar...HardQ04A taxpayer filed their Year 1 individual income tax return on March 15, Year 2. The return showed...HardQ05A taxpayer disagrees with a proposed IRS deficiency and wishes to litigate the matter. The taxpay...Hard