Question

Stuart has a short-term capital loss, a collectible long-term capital gain, and a long-term capital gain from land held as investment. The short-term loss is first applied to the collectible capital gain.

A. True
B. False

Answer 1

False. The short-term capital loss is first applied to any short-term gains before being applied to long-term gains.

Step-by-step explanation:

False. When a taxpayer has both short-term capital losses and long-term capital gains, the short-term losses are first applied to any short-term gains. If there are still remaining short-term losses, they can then be applied to any long-term gains. In the given scenario, the short-term capital loss would be applied to the short-term gain from the collectible capital gain first.