Question

A corporation has a NLTG of $40,000 and a NSTL of $10,000 in the current year. It had capital gains/(losses) as follows

YEAR 3 $20,000
YEAR 2 (35,000)
YEAR 1 10,000

HOW MUCH MUST THE CORPORATION ADD TO ITS OTHER INCOME DUE TO CAPITAL GAINS TO DETERMINE TAXABLE INCOME IN THE CURRENT YEAR

A. 5000
B. 25000
C. 30000
D. 35,000

Answer 1

C. 30000

Step-by-step explanation:

net capital gain

= net long term capital gain in current year - net short term loss in current year

= $40,000 - $10,000

= $30,000

Therefore, THE CORPORATION ADD $30,000 TO ITS OTHER INCOME DUE TO CAPITAL GAINS TO DETERMINE TAXABLE INCOME IN THE CURRENT YEAR.