Capital Gains and Losses (LO. 5)
Jawan has the following capital gains and losses in the current year:
What is the effect of the capital gains and losses on Jawan's taxable income?
The capital gain and loss netting results in a short-term capital loss of $_________.
1. First Netting:-
Short term gain and loss netting:-
Short term capital gain:- Nil
Short term capital loss :- $(1300)
Net short term capital loss = $(1300)
Long term gain and loss netting:-
Long term capital gain:- $8600
Long term capital loss :- $(4100)
Long term capital loss carry forward $(3500)
Net long term capital gain :- $1000
Since the first netting results in both gain and a loss , therefore a second netting is required to reduce the capital gains and loss to either a net gain or loss for the year.
Net short term capital loss $(1300)
Net long term capital gain $1000
Net Short term capital loss $300
Jawan can deduct the $300 net short - term capital loss.
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