Melissa sells stock she purchased in 2005 for a $7,500 gain in 2018. In August 2018, she also sells land she purchased as an investment in December 2017 at a loss of $12,000.
I.Melissa's tax on the $7,500 gain is $1,125.
II.Melissa has a deductible capital loss of $3,000 in 2018.

Question

Melissa sells stock she purchased in 2005 for a $7,500 gain in 2018. In August 2018, she also sells land she purchased as an investment in December 2017 at a loss of $12,000.
I.Melissa's tax on the $7,500 gain is $1,125.
II.Melissa has a deductible capital loss of $3,000 in 2018.
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Quizplus · Accepted Answer

Statement I is incorrect because the tax on the $7,500 gain depends on Melissa's tax bracket and whether it's considered a long-term or short-term capital gain. Since the stock was held for more than a year, it's a long-term capital gain, but the tax rate could vary. Statement II is correct because the IRS allows individuals to deduct up to $3,000 of net capital losses against other income each year, with the ability to carry over additional losses to future years.

Melissa Sells Stock She Purchased in 2005 for a $7,500