Question

xercise 3-26 (Algorithmic) (LO. 8) During the year, Tamara had capital transactions resulting in gains (losses) as follows: • Sold stock in ABC Company (acquired two years ago) ($1,600) • Sold collectible coins (held for more than one year) 2,240 • Sold stock in XYZ Company (acquired six months ago) (4,480) • Sold stock in LMN Company (acquired three years ago) 560 Determine Tamara's net capital gain or loss as a result of these transactions. As a result of these transactions, Tamara has a net short-term capital gain of $ and a of $ . Overall, Tamara has a net of $ .

Answer 1

Description	Status-LTCG(L) or STCG/(L)	Reason	Amount
Sold Stock in ABC Co.	Long Term Capital Loss	Held for more than one year	($1600)
Sold Collectible Coins	Long Term Capital Gain	Held for more than one year	$2240
Sold Stock in XYZ Co.	Short Term Capital Loss	Held for less than one year	($4480)
Sold Stock in LMN Co.	Long Term Capital Gain	Held for more than one year	$560

Net Long Term Capital Gain/(Loss) =[($1600)+$2240+$560]=$1200

Net Short Term Capital Gain/(loss) =($4480)

Net postion of Tamhara :Short Term Capital Gain/(Loss) = $1200+($4480)= ($3280)

Note: Long Term Capital Loss can be set off only against Long term capital Gain whereas Short Term Capital Loss can be adjusted against both Short Term Capital Gain as well as Long Term Capital Gain.