Question

In X8, Erin had the following capital gains (losses) from the sale of her investments: $2,000 LTCG, $25,000 STCG, ($9,000) LTCL, and ($15,000) STCL. What is the amount and nature of Erin's capital gains and losses?

a. $3,000 net short-term capital gain
b. $3,000 net long-term capital loss
c. $4,000 net short-term capital gain
d. $4,000 net long-term capital loss
e. None of these

Answer 1

a. $3,000 net short-term capital gain

Step-by-step explanation:

The computation of the amount of the capital gains and losses is shown below:

= Long term capital gain - long term capital loss

= $2,000 - $9,000

= -$7,000

= Short term capital gain - short term capital loss

= $25,000 - $15,000

= $10,000

After equating these above values the balance would be $3,000 and considered as a short term capital gain