In X8, Erin had the following capital gains (losses)from the sale of her investments: $2,000 LTCG, $25,000 STCG, ($9,000)LTCL, and ($15,000)STCL. What is the amount and nature of Erin's capital gains and losses?
A)$3,000 net short-term capital gain.
B)$3,000 net long-term capital loss.
C)$4,000 net short-term capital gain.
D)$4,000 net long-term capital loss.
E)None of the choices are correct.

Question

Quizplus · Accepted Answer

Erin's net capital gains and losses are calculated by first offsetting long-term gains and losses, and then short-term gains and losses. Long-term capital gains (LTCG) of $2,000 minus long-term capital losses (LTCL) of $9,000 results in a $7,000 net long-term capital loss. Short-term capital gains (STCG) of $25,000 minus short-term capital losses (STCL) of $15,000 results in a $10,000 net short-term capital gain. The net long-term loss can then be used to offset the net short-term gain, resulting in a $3,000 net short-term capital gain.

In X8, Erin Had the Following Capital Gains (Losses)from the Sale