Seamus had $16,000 of net short-term capital loss in 2017. In 2018, Seamus has $17,000 of long-term capital loss and $26,000 of long-term capital gain. Which of the following statements is correct?
A) Seamus had a $13,000 short-term capital loss carryover to 2018.
B) Seamus reports an overall $9,000 net capital gain in 2018.
C) Seamus reports an overall $4,000 net short-term capital loss in 2018.
D) a. and c.
E) None of the above.

Question

Quizplus · Accepted Answer

- Seamus had $16,000 of net short-term capital loss in 2017, which can be carried forward to future years.
- In 2018, Seamus has a $17,000 long-term capital loss and $26,000 long-term capital gain. The net long-term capital gain is $9,000 ($26,000 - $17,000).
- Seamus can apply the short-term capital loss carryover of $16,000 against the net long-term capital gain of $9,000, resulting in a remaining $7,000 long-term capital loss.
- The remaining $7,000 long-term capital loss can be used to offset any other capital gains in 2018 or carried forward to future years.
- Therefore, Seamus reports an overall $4,000 net short-term capital loss in 2018 ($0 short-term capital gain/loss - $16,000 short-term capital loss carryover + $7,000 remaining long-term capital loss = -$9,000 net capital loss, which can only be deducted up to $3,000 against other income in 2018, resulting in a $4,000 net short-term capital loss).

Seamus Had $16,000 of Net Short-Term Capital Loss in 2017