Ryan has the following capital gains and losses for 2019: $6,000 STCL, $5,000 28% gain, $2,000 25% gain, and $6,000 0%/15%/20% gain.Which of the following is correct:
A)The net capital gain is composed of $1,000 25% gain and $6,000 0%/15%/20% gain.
B)The net capital gain is composed of $5,000 28% gain and $2,000 0%/15%/20% gain.
C)The net capital gain is composed of $3,000 28% gain, $2,000 25% gain, and $2,000 0%/15%/20% gain.
D)The net capital gain is composed of $1,000 28% gain and $6,000 0%/15%/20% gain.
E)None of these.

Question

Quizplus · Accepted Answer

First, offset the $6,000 short-term capital loss (STCL) against the gains. The remaining gains are $5,000 at 28%, $2,000 at 25%, and $6,000 at 0%/15%/20%. Since the STCL fully offsets the highest taxed gains first, it reduces the 28% gain to $1,000 ($5,000 - $4,000) and eliminates the 25% gain entirely. The $6,000 0%/15%/20% gain remains unaffected. Therefore, the net capital gain is composed of $1,000 at 28% and $6,000 at 0%/15%/20%.

Ryan Has the Following Capital Gains and Losses for 2019