In 2016, Jenny had a $12,000 net short-term capital loss and deducted $3,000 as a capital loss deduction. In 2017, Jenny has a $18,000 0%/15%/20% long-term capital gain and no other capital gain or loss transactions. Which of the statements below is correct for 2017?

Question

Quizplus · Accepted Answer

Jenny starts with a $12,000 capital loss carryover from 2016, and deducts $3,000 of that in 2016, leaving her with a $9,000 capital loss carryover.

In 2017, she has a $18,000 long-term capital gain. Since the long-term capital gains tax rates are 0%, 15%, and 20%, we need to break down the gain accordingly:

- $0 at 0% 
- $0 at 15% 
- $18,000 at 20%

Jenny can use her $9,000 capital loss carryover to offset $9,000 of her $18,000 long-term capital gain. This leaves her with a net long-term capital gain of $9,000, which is taxed at 20%.

Therefore, Jenny has a $9,000 net capital gain in 2017.

In 2016, Jenny Had a $12,000 Net Short-Term Capital Loss