In 2015, Carmen had a net capital loss of $10,000 and taxable income of $100,000. What is Carmen's loss carryforward to 2016?

Question

Quizplus · Accepted Answer

When an individual has a net capital loss, they can use it to offset capital gains and up to $3,000 of ordinary income. Any excess capital loss can be carried forward to future tax years. In this case, since Carmen had taxable income of $100,000, she can use the $10,000 net capital loss to offset any capital gains she has and up to $3,000 of ordinary income in 2015. This means that $7,000 of the net capital loss will be carried forward to 2016, as $3,000 is used to offset ordinary income in 2015. Therefore, the answer is D) $7,000.

In 2015, Carmen Had a Net Capital Loss of $10,000