Question

Problem 17-37 (LO. 2)

During 2017, Gorilla Corporation has net short-term capital gains of $15,000, net long-term capital losses of $105,000, and taxable income from other sources of $460,000. Prior years' transactions included the following:

2013 net short-term capital gains	$40,000
2014 net long-term capital gains	18,000
2015 net short-term capital gains	25,000
2016 net long-term capital gains	20,000

If an amount is zero, enter "0".

a. How much is Gorilla's net capital loss for 2017?
$

What is the amount of the capital loss deduction on Gorilla's 2017 tax return?
$

Any excess net capital loss is carried back or forward as a .

b. Of the excess 2017 net capital loss, how much is carried back to the previous years?
$

c. Compute the amount of capital loss carryover to 2018 and future years.
$

Indicate the years to which the loss may be carried. Select "Yes" or "No", which ever is appropriate.

2018
2019
2020
2021
2022

d. If Gorilla is a sole proprietorship, rather than a corporation, how would the owner report these transactions on her 2017 tax return?

Gorilla offsets $ of capital gains against her losses and an additional $ in capital . The remaining $ is .

e. Assume that Gorilla Corporation’s capital loss carryfoward in part (c) is $27,000 and that Gorilla will be able to use $11,000 of the carryover to offset capital gains in 2018 and the remaining $16,000 to offset capital gains in 2019.

Assume the following:

A discount rate of 5%.

Present value factors - 1.000 for 2014-2016; 0.952 for 2018 and 0.907 for 2020.

Gorilla Corporation’s marginal income tax rate is 34% for all tax years.

Round your computations to the nearest dollar.

In present value terms, determine the tax savings of the $105,000 long-term capital loss recognized in 2017.
$

Answer 1

a.1. Net Capital Loss is $ 90000 ( 105000 - 15000)

a.2. 0 because corporation cannot take claim of capital loss against orfinary income

a.3. Any excess net capital loss is carried back or forward as a .

b. Of the excess 2017 net capital loss, how much is carried back to the previous years?

It is carried back upto 3 years. Accordingly, 90000-18000-25000-20000 = $ 63000

c. Amount which can be carried forward is 90000-63000 = $ 27000. This can be carried forward to all the years from 2018 to 2022