Alexis has a long-term capital loss of $13,000 on the sale of stock in 2014. She has no other capital gains or losses for the year. Her taxable income without this transaction is $57,000. What is her 2014 taxable income considering this capital loss?

Question

Quizplus · Accepted Answer

For tax purposes, a taxpayer can offset their capital gains with their capital losses. If there are any excess losses, they can be deducted from their ordinary income, up to a maximum of $3,000 per year, and any remaining amount can be carried forward to future years.

In this scenario, Alexis had a long-term capital loss of $13,000 and no other capital gains or losses. She can use this loss to offset any capital gains if she had them. However, since she has no capital gains, she can deduct the entire $13,000 loss from her ordinary income.

Her taxable income without the capital loss would be $57,000, but since she can deduct the full $13,000 loss, her taxable income for the year would be reduced to $54,000 (57,000 - 13,000 = 54,000).

Therefore, the correct answer is B.

Alexis Has a Long-Term Capital Loss of $13,000 on the Sale