Given below are Mario's capital gains and losses for two consecutive years.What is the effect of the capital gains and losses on Mario's taxable income for each year?
First Second
Year Year

A)$(9,000)$ 9,000
B)$ 3,000 $ 1,000
C)$(3,000)$ 3,000
D)$(3,000)$(3,000)
E)$(3,000)$ -0-

Question

Given below are Mario's capital gains and losses for two consecutive years.What is the effect of the capital gains and losses on Mario's taxable income for each year?
First Second
Year Year

A)$(9,000)$ 9,000 
B)$ 3,000 $ 1,000 
C)$(3,000)$ 3,000 
D)$(3,000)$(3,000) 
E)$(3,000)$ -0-

Quizplus · Accepted Answer

In the first year, Mario has a capital loss of $9,000, which means he has lost money on his investments. This loss can be used to offset any capital gains he may have in the same year or in future years.
In the second year, Mario has a capital gain of $9,000, which will be added to his taxable income. However, since he had a capital loss of $9,000 in the previous year, he can use that loss to offset this gain. 
Therefore, his taxable income for the second year will be unchanged and he will not have to pay taxes on the capital gain. 
The only choice that reflects this scenario is C.

Given Below Are Mario's Capital Gains and Losses for Two