Toliver Corporation incurs a long-term capital loss of $38,000 and a short-term capital gain of $33,000. Also, Toliver has operating income of $175,000. What is Toliver's taxable income?
A)$45,000
B)$170,000
C)$172,000
D)$175,000
E)$208,000

Question

Quizplus · Accepted Answer

Toliver's taxable income is $175,000 because long-term capital losses can only offset capital gains, not ordinary income. Since the capital loss exceeds the capital gain, there is no net capital gain to add to the operating income. The remaining capital loss cannot reduce the operating income for tax purposes.

Toliver Corporation Incurs a Long-Term Capital Loss of $38,000 and a Short-Term