Gabrielle has the following gains and losses for the current year:
$\begin{array}{lr}
\text { Short-term capital loss } & \$(8,000) \
\text { Long-term capital gain } & 3,000 \
\text { Section } 1231 \text { gain } & 3,000 \
\text { Section } 1231 \text { loss } & (5,000)
\end{array}$
What is Gabrielle's net capital gain or loss position for the year?
A)$7,000 net short-term capital loss.
B)$3,000 net short-term capital gain.
C)$5,000 net short-term capital loss.
D)$3,000 net short-term capital gain

Question

Quizplus · Accepted Answer

Gabrielle has a short-term capital loss of $(8,000) and a long-term capital gain of $3,000 which can be used to offset each other. Therefore, she has a net short-term capital loss of $(5,000) $(8,000-$3,000). Additionally, she has a Section 1231 gain of $3,000 and a Section 1231 loss of $(5,000). The net Section 1231 loss is $(2,000) $5,000-$3,000. Since the net short-term capital loss of $(5,000) is greater, it can be used to offset the $3,000 Section 1231 gain leaving a net short-term capital loss of $(2,000). Therefore, Gabrielle has a net capital loss position of $(2,000) for the year.

Gabrielle Has the Following Gains and Losses for the Current