In 2018, Jenny had a $12,000 net short-term capital loss and deducted $3,000 as a capital loss deduction.In 2019, Jenny has a $18,000 0%/15%/20% long-term capital gain and no other capital gain or loss transactions.Which of the statements below is correct for 2019?
A)Jenny has a $18,000 net capital gain.
B)Jenny has a $9,000 net capital gain.
C)Jenny has a $9,000 net capital loss.
D)Jenny has a $3,000 capital loss deduction.
E)Jenny has a $9,000 capital loss deduction.

Question

Quizplus · Accepted Answer

In 2018, Jenny had a net short-term capital loss of $12,000, but she was only able to deduct $3,000 as a capital loss deduction. This means that she has a remaining $9,000 capital loss that can be carried forward to future tax years.

In 2019, Jenny has a $18,000 long-term capital gain. She does not have any short-term capital gains or losses. Therefore, her taxable capital gain is calculated as follows:

Long-term capital gain: $18,000
Less: Long-term capital losses: $0
Equals: Taxable capital gain: $18,000

Since Jenny has a remaining capital loss of $9,000 from 2018, she can use this to offset her taxable capital gain of $18,000. This results in a net capital gain of $9,000 ($18,000 - $9,000).

Therefore, the correct answer is B. Jenny has a net capital gain of $9,000.

In 2018, Jenny Had a $12,000 Net Short-Term Capital Loss