Question

In Year 1 Cypress, who is married but filing separately, incurred a net capital loss in the amount of $25,000. Cypress also had the following net capital gains in Year 1:

ABC stock Short-term $7,000
DEF stock Short-term 2,000
GHI stock Short-term 5,000
JKL stock Long-term 4,000
MNO stock Long-term 3,000
Total $21,000
What amount, if any, of the Year 1 capital loss will Cypress carry over to Year 2 if the Year 1 deduction is maximized?
a. $4,000
b. $1000
c. $2.500

Answer 1

c. $2.500

Step-by-step explanation:

The maximum capital loss deduction per year for a married person filing separately or a single filer is $1,500 per year (if filing jointly the maximum deduction is $3,000).

net capital loss/gain = -$25,000 + $7,000 + $2,000 + $5,000 + $4,000 + $3,000 = -$4,000

-$4,000 loss + $1,500 capital gains deduction = -$2,500 carryover loss