Ellie has the following capital gains and losses and qualified dividend income during the current year:
?
$\begin{array}{lr}
\text { Short-term capital loss } & \$(10,000) \
\text { Collectibles loss } & (4,000) \
\text { Long-term capital gain } & 5,000 \
\text { Qualified dividend income } & 10,000
\end{array}$

The effect of the above on the current year's taxable income is:

Question

Ellie has the following capital gains and losses and qualified dividend income during the current year:
?
$\begin{array}{lr}
\text { Short-term capital loss } & \$(10,000) \
\text { Collectibles loss } & (4,000) \
\text { Long-term capital gain } & 5,000 \
\text { Qualified dividend income } & 10,000
\end{array}$

The effect of the above on the current year's taxable income is:

Quizplus · Accepted Answer

Ellie's capital transactions result in a net capital loss of $9,000 ($10,000 short-term loss + $4,000 collectibles loss - $5,000 long-term gain) and the qualified dividend income remains unaffected at $10,000. The net capital loss can be used to offset other income, hence the effect on taxable income is a net capital loss of $3,000 after applying the $3,000 limit on capital losses against ordinary income, plus the $10,000 of qualified dividend income.

Ellie Has the Following Capital Gains and Losses and Qualified