Gertie has a NSTCL of $9,000 and a NLTCG of $5,500 during the current taxable year. After gains and losses are offset, Gertie reports

Question

Quizplus · Accepted Answer

NSTCL (Net Short-Term Capital Loss) of $9,000 and NLTCG (Net Long-Term Capital Gain) of $5,500 are used to calculate the capital gain or loss for the year.
The formula for calculating capital gain/loss is:
Net Capital Gain/Loss = Total Capital Gains - Total Capital Losses
In this case,
Total Capital Gains = NLTCG = $5,500
Total Capital Losses = NSTCL = $9,000
Net Capital Loss = $9,000 - $5,500 = $3,500
Since the net capital loss is negative, it can be used to offset other income up to a maximum of $3,000 for the year. The remaining loss can be carried forward to future years. Therefore, Gertie reports a net capital loss of $3,500 on her tax return. The correct answer is B.

Gertie Has a NSTCL of $9,000 and a NLTCG of $5,500