I need help ASAP. Note: This homework is graded Taupe, a calendar year taxpayer,

Question

I need help ASAP. Note: This homework is graded

Taupe, a calendar year taxpayer, has the following capital transactions for 2016: long-term capital loss of $4,000 and a short-term capital loss of $4,000. How are these items handled for tax purposes if Taupe is an individual and a C corporation. If an amount is zero, enter "O" a. An individual? An indvdual may curently deduct s 90,000 x of the short term capital loss and carried over90,000 x In addition 90,000 X of the short-term capital loss and carried over $ 90,000 X . In addition, 0of the long-term capital loss is currently deductible and 90,000 X is carried over. Feedback Check My Work Significant differences exist in the treatment of capital losses for income tax purposes. b. A C corporation? 0 of losses short-term capital losses and 0 of the long-term capital losses can be used in 2016. $ 90,000 X can be carried back as short-term capital losses and $ V as long-term capital losses.

Explanation / Answer

a. An indoividual can deduct maximum $3,000 of capital loss in a calender year and remaining amount can be carried over in succeeding years. Therefore, Taupe can deduct $3,000 of the short term capital loss and carried over $1,000. In addtion $0 can be deducted as long term capital loss and $4,000 can be carried over.

b. A corporation can offset capital losses only from capital gains and therefore, if there is any unused capital losses, then then the same will be carried back in maximum 3 years and forward in 5 years but the same will be treated as short term losses even if character is long term. Therefore, $0 of short term losses and $0 of long term losses can be used. $8,000 can be carried back as short term capital losses and $0 as lomg term.

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