Andy has the following capital gains and losses during the current year:
Andy's capital gains and losses will

A)Increase taxable income by $2,000.
B)Decrease taxable income by $6,000.
C)Decrease taxable income by $3,000.
D)Decrease taxable income by $4,000.

Question

Andy has the following capital gains and losses during the current year:
Andy's capital gains and losses will

A)Increase taxable income by $2,000. 
B)Decrease taxable income by $6,000. 
C)Decrease taxable income by $3,000. 
D)Decrease taxable income by $4,000.

Quizplus · Accepted Answer

Capital gains and losses can be used to offset each other, resulting in a lower taxable income. In this case, Andy's capital losses will decrease his taxable income by $3,000. The answer is not A because capital gains increase taxable income, not decrease it. The answer is not B because Andy's losses are greater than his gains, resulting in an overall decrease in taxable income. The answer is not D because $4,000 is not the correct amount of decrease in taxable income based on the given information.

Andy Has the Following Capital Gains and Losses During the Current