Orange Corporation was formed in 2015.In that year it had a net capital loss of $2,000.In 2016,it had a net capital gain of $5,000.In 2017,the company reported a net capital loss of $9,000.What is the amount of capital loss carryforward to 2018,if any?

Question

Quizplus · Accepted Answer

According to the capital loss carryover rules, if a corporation has a net capital loss in a particular tax year, it can be carried back up to 3 years or carried forward up to 5 years to offset future capital gains.

In this case, Orange Corporation had a net capital loss of $2,000 in 2015, which can be carried forward to 2016 and beyond. In 2016, it had a net capital gain of $5,000, which can be offset by the capital loss carried forward from 2015. This leaves a net capital gain of $3,000 ($5,000 - $2,000) in 2016.

In 2017, Orange Corporation had a net capital loss of $9,000. This can be carried forward to 2018 and beyond.

Therefore, the amount of capital loss carryforward to 2018 is $7,000 ($2,000 + $5,000 - $9,000) which is option C.

Orange Corporation Was Formed in 2015