During 2017, Grant receives a $45,000 salary and has no deductions for AGI. In 2
ID: 2541159 • Letter: D
Question
During 2017, Grant receives a $45,000 salary and has no deductions for AGI. In 2016, Grant had a $5,500 STCL available and no other capital losses or capital gains. Consider the following sales. An automobile purchased in 2012 for $11,200 and held for personal use is sold for $8,000. On April 10, 2017, stock held for investment is sold for $32,000. The stock was acquired on November 20, 2016, for $16,000. Salary? Net short-term capital gain (loss)? Net long-term capital gain (loss)? and total AGI? Assume that the 2016 STCL of $5,500 is before Grant has taken any capital loss deduction in 2016.
Explanation / Answer
Automobile purchased in year 2012 for $11200 heldd for personal use and sold in year 2017 for $8000 would result in a lonf term capital loss of $3200 as the property held for more than a year. but the same is not reportable to IRS and not deductible from any other capital gain because it is a loss on sale of personal property and IRS prohibits from taking benefits of sett off on losses on personal property which usuallly includes vehicle.
Calculation of gain on transcation of stock.
Acquisition date of stock = Nov 20, 2016 @ $16000
Sales date of stock = April 10, 2017 @ $32000
Holding period of stock is more than one year so gain will be short term capital gain.
Short term capital gian = Sale price - aaquisition price
= $32000 - $16000 = $16000
Net short term capital gain.
Net short term capital gain = current year short term gain - carry forwarded short term capital loss
= $16000 - $5500
= $10500 (Net short term capital gain for year 2017)
Net long term capital loss
Net long term capital loss is $3200 from sale of personal automobile but it is not to be reported to IRS and not to be deducted from any other capital gains.
Total AGI for 2017 of Grant
Salary for 2017 = $45000
Short term capital gain = $10500
Total AGI = $45000 + $10500 = $55500
No balance of capital gain is remaining to carryover to future tax years.
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