In 2017, Mark has $18,000 short-term capital loss, $7,000 28% gain, and $6,000 0%/15%/20% gain. Which of the statements below is correct?

Question

Quizplus · Accepted Answer

According to IRS rules, when taxpayers have both short-term capital losses and long-term capital gains, the net capital gains are reduced by the capital losses. In this case, Mark has $18,000 short-term capital loss, $7,000 28% gain, and $6,000 0%/15%/20% gain. 
First, Mark can offset the $7,000 28% gain with $7,000 of the $18,000 short-term capital loss, leaving him with $11,000 loss. 
Next, Mark can offset the remaining $11,000 short-term capital loss with $3,000 of his long-term capital gains, leaving him with $4,000 long-term capital gains. 
Therefore, Mark can use $3,000 of his short-term capital loss to offset his long-term capital gains, and he can carryforward the remaining $8,000 in short-term capital losses to future tax years or use it to offset future capital gains. 
Thus, Mark has a $3,000 capital loss deduction.

In 2017, Mark Has $18,000 Short-Term Capital Loss, $7,000 28