Question

ethel had the following from securities transactions during the current year: long-term capital gain: $6,400 long-term capital loss: $2,200 short-term capital gain: $2,300 short-term capital loss: $5,500 which of the following describes the net capital gain or loss reportable by ethel for the current tax year?

Answer 1

Ethel will report a net long-term capital gain of $1,000 for the current tax year, after offsetting her long-term capital gains and losses and her short-term capital gains and losses against each other.

Step-by-step explanation:

Ethel had a combination of long-term and short-term capital gains and losses. To calculate her net capital gain or loss, we should first combine the long-term transactions and short-term transactions separately.

Ethel had a long-term capital gain of $6,400, and a long-term capital loss of $2,200. Her short-term capital gain was $2,300, and her short-term capital loss was $5,500.

Net long-term capital gain or loss: $6,400 (gain) - $2,200 (loss) = $4,200 (gain)

Net short-term capital gain or loss: $2,300 (gain) - $5,500 (loss) = $3,200 (loss)

Now, we offset the net short-term loss against the net long-term gain:

Net capital gain or loss: $4,200 (long-term gain) - $3,200 (short-term loss) = $1,000 (net long-term capital gain)

Therefore, for the current tax year, Ethel will report a net long-term capital gain of $1,000.