Tatoo Inc. reported a net capital loss of $13,000 in 2018. The company had a net capital gain of $4,300 in 2016 and $3,000 in 2015. In 2017, 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 remaining after it applies the carryback?
A) $4,700.
B) $5,700.
C) $8,700.
D) $13,000.

Question

Quizplus · Accepted Answer

The net capital loss is first carried back to 2015 as $3,000 is deducted against net capital gain. The $4,300 net capital gain in 2016 is offset next. Because Tatoo reported a net operating loss in 2017, it is not allowed to apply the carryback to that year. The remaining carryover is $5,700 ($13,000 − $3,000 − $4,300).

Tatoo Inc Reported a Net Capital Loss of $13,000 in 2018