Helena and Irwin are married taxpayers who file jointly. Their taxable income before considering capital gains and losses is $120,000. They have long-term capital gains of $8,000, short-term capital losses of $4,000, and short-term capital gains of $5,000. What are the tax effects of these events?
I.The short-term capital losses can offset only $3,000 of the short-term capital gains.
II.The net capital gains will add $1,420 to the couple's tax liability.

A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question

Helena and Irwin are married taxpayers who file jointly. Their taxable income before considering capital gains and losses is $120,000. They have long-term capital gains of $8,000, short-term capital losses of $4,000, and short-term capital gains of $5,000. What are the tax effects of these events?
I.The short-term capital losses can offset only $3,000 of the short-term capital gains.
II.The net capital gains will add $1,420 to the couple's tax liability.
​
A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Quizplus · Accepted Answer

The Answer of Helena and Irwin are married taxpayers who file jointly. Their taxable income before considering capital gains and losses is $120,000. They have long-term capital gains of $8,000, short-term capital losses of $4,000, and short-term capital gains of $5,000. What are the tax effects of these events?
I.The short-term capital losses can offset only $3,000 of the short-term capital gains.
II.The net capital gains will add $1,420 to the couple's tax liability.
​
A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Helena and Irwin Are Married Taxpayers Who File Jointly