During the current year, Terry has a short-term capital loss of $9,000 and a long-term capital gain of $3,000. Due to these transactions Terry reports
A)A capital loss deduction of $3,000 and a loss carryforward of $3,000
B)A capital loss deduction of $3,000 and a loss carryforward of $6,000.
C)A capital loss deduction of $9,000.
D)A capital gain of $3,000 and a loss carryforward of $9,000.
E)A capital loss deduction of $6,000

Question

Quizplus · Accepted Answer

The short-term capital loss of $9,000 is first offset by the long-term capital gain of $3,000, resulting in a net capital loss of $6,000. The maximum capital loss deduction allowed is $3,000, so Terry can deduct $3,000 from his ordinary income. The remaining $3,000 loss is carried forward to future years.

During the Current Year, Terry Has a Short-Term Capital Loss