Question

Tyler has the following capital gains and losses: Short Term Capital Gain: $10,000 Short Term Capital...

Tyler has the following capital gains and losses:

Short Term Capital Gain: $10,000

Short Term Capital Loss: ($4,000)

Long Term Capital Gain: $15,000

What is the total capital gains / losses? What is the tax rate?

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Answer #1

Given information:

Short term capital Gain : $ 10,000

Short term capital loss : ($ 4,000)

Long term capital gain : $ 15,000

Short term capital loss can be set off against short term capital gain and long term capital gain. Hence the long term gain and short term gain will be;

Short term Long term
a Capital Gain $ 10,000 $ 15,000
b Capital Loss (set off) ($ 4,000) 0
c Net Capital Gain $ 6,000 $ 15,000

The Tax on Long term capital gains on shares are exempted from tax, tax rate on Long term capital gains is 20% considering indexed cost of acquisition and improvements, 10% considering actual cost or historical cost.

The tax on short term capital gains on shares will taxes at 15%, in all other cases short term capital gains are added to the income, taxed as per applicable slab rates. The deductions under chapter VI A are not allowed in case of such gains.

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