A taxable entity has the following capital gains and losses in 2017:

Question

A taxable entity has the following capital gains and losses in 2017:
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Quizplus · Accepted Answer

Statement I is incorrect because the net short-term capital loss is $3,000, which is the maximum amount that can be deducted against ordinary income. Any excess loss would be carried forward to future years.
Statement II is correct because the long-term capital gains are taxed at a lower rate than the short-term capital gains. In this case, the long-term capital gain of $10,000 would be taxed at a maximum rate of 20%, while the short-term capital gain of $5,000 would be taxed at the ordinary income tax rate (up to 37%).

A Taxable Entity Has the Following Capital Gains and Losses