Seamus had $16,000 of net short-term capital loss in 2011. In 2012, Seamus has $17,000 of long-term capital loss and $26,000 of long-term capital gain. Which of the following statements is correct?
A)Seamus had a $13,000 short-term capital loss carryover to 2012.
B)Seamus has an $9,000 2012 net long-term capital gain.
C)Seamus has a $4,000 2012 net short-term capital loss.
D)a.and c.
E)None of the above.

Question

Quizplus · Accepted Answer

Seamus can first use his 2011 net short-term capital loss of $16,000 to offset any 2012 capital gains. Next, Seamus can use up to $3,000 of capital losses to offset ordinary income. After using up the $16,000 and $3,000 limits, Seamus has a remaining capital loss of $13,000.

Seamus has $26,000 of long-term capital gain and $17,000 of long-term capital loss in 2012, which results in a $9,000 net long-term capital gain.

Therefore, Seamus has exhausted his short-term capital loss carryover and has $13,000 of long-term capital loss carryover, which can be used in future tax years.

Thus, both statements (a) and (c) are correct, making option D the correct answer.

Seamus Had $16,000 of Net Short-Term Capital Loss in 2011