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Brent files a return as married filing jointly. In 2019, he had the following items:

• Salary of $104,000.
• Loss of $105,000 on the sale of § 1244 stock acquired two years ago.
• Interest income of $8,000.
Brent's capital loss carryforward is:
a.$2,000.
b.$3,000.
c.$9,000.
d.$8,000.
e.$5,000.

1 Answer

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Final answer:

Brent's capital loss carryforward after a $3,000 deduction against ordinary income should be $102,000 for future tax years, but the provided answer choices do not include this amount.

Step-by-step explanation:

The question relates to the calculation of capital loss carryforward in the context of U.S. tax laws concerning the sale of § 1244 stock. Brent, who is filing married filing jointly, has a salary of $104,000, an interest income of $8,000, and a loss of $105,000 on the sale of § 1244 stock acquired two years ago. Under the tax code, the maximum capital loss that can be deducted in any one year against ordinary income is $3,000 for individuals or couples filing jointly. The loss on the stock sale after offsetting the deduction against his ordinary income would be $105,000 - $3,000 = $102,000. Because the loss exceeds the annual limit, it can be carried forward to future tax years. Therefore, the remaining capital loss that Brent can carry forward is $102,000, but since the choices provided do not include this amount, it suggests there may be a typo or misunderstanding in the question. None of the choices (a-e) match the calculated carryforward amount.

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