Question

An individual reports the following capital transactions in the current year: Short-term capital gain $1,000 Short-term capital loss $11,000 Long-term capital gain $10,000 Long-term capital loss $6,000 What amount is deducted in arriving at adjusted gross income?a. $10,000b. $6,000c. $3,000d. $0

Answer 1

$3,000

Step-by-step explanation:

We know that if the capital loss is greater then Capital gain. the Excess amount may be deducted up to $3,000 and if any amount remains that will be deducted in next year.

In this situation Total Short term capital loss = $11,000 - $1,000

= $10,000

Total long term capital gain = $10,000 - $6,000

= $4,000

The total amount of deducting during the year is $3000.

Remain $3,000 will be deducted in next year.