Tatoo Incorporated reported a net capital loss of $13,000 in 2020. The company had a net capital gain of $4,300 in 2018 and $3,000 in 2017. In 2019, although the company suffered a net operating loss, it had net capital gains of $1,000. What is the amount of Tatoo's capital loss carryover to 2021 remaining after it applies the carryback?
A)$4,700.
B)$5,700.
C)$8,700.
D)$13,000.

Question

Quizplus · Accepted Answer

The capital loss carryover to 2021 is calculated as follows:

Net capital loss in 2020: ($13,000)
Capital gains in 2018 and 2017: $4,300 + $3,000 = $7,300
Net capital gains in 2019: $1,000
Total capital gains: $8,300

Since the company can carry forward a capital loss indefinitely, the capital loss carryover to 2021 is:

$13,000 (net capital loss in 2020) - $8,300 (total capital gains before carryback) = $4,700 remaining capital loss carryover

Therefore, the answer is choice B, $5,700.

Tatoo Incorporated Reported a Net Capital Loss of $13,000 in 2020