Tatoo Inc. reported a net capital loss of $13,000 in 2016. It had a net capital gain of $4,300 in 2014 and $3,000 in 2013. In 2015, although the company suffered a net operating loss, it had net capital gains of $1,000. What is the amount of Tatoo's capital loss carryover remaining after it applies the carryback?
A) $4,700
B) $5,700
C) $8,700
D)$13,000

Question

Quizplus · Accepted Answer

First, we need to apply the net capital loss for 2016 to the prior years. 
- 2016: Net capital loss = $13,000
- 2015: Net capital gains = $1,000, therefore, Tatoo can apply $1,000 of the capital loss to offset these gains, leaving a remaining net capital loss of $12,000. 
- 2014: Net capital gains = $4,300, therefore, Tatoo can apply $4,300 of the remaining net capital loss to offset these gains, leaving a remaining net capital loss of $7,700. 
- 2013: Net capital gains = $3,000, therefore, Tatoo can apply $3,000 of the remaining net capital loss to offset these gains, leaving a remaining net capital loss of $4,700. 
Thus, the capital loss carryover remaining after applying the carryback is $4,700 (Option B).

Tatoo Inc Reported a Net Capital Loss of $13,000 in 2016