A taxable entity has the following capital gains and losses in 2018:
?
$\begin{array}{lr}
\text { Short-term capital loss } & \$(22,000) \
\text { Long-term capital gain } & 15,000
\end{array}$

I.If the entity is an individual, a $\$ 3,000$ deduction is allowed in 2018 .
II. If the entity is a corporation, a $\$ 7,000$ deduction is allowed in 2018 .
A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question

A taxable entity has the following capital gains and losses in 2018:
?
$\begin{array}{lr}
\text { Short-term capital loss } & \$(22,000) \
\text { Long-term capital gain } & 15,000
\end{array}$

I.If the entity is an individual, a $\$ 3,000$ deduction is allowed in 2018 .
II. If the entity is a corporation, a $\$ 7,000$ deduction is allowed in 2018 .
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

For individuals, the IRS allows a deduction of up to $3,000 of net capital losses against ordinary income per year. Corporations, however, do not have a specific dollar deduction limit for capital losses; they can only use capital losses to offset capital gains.