Your client has a net short-term gain of $3,000 and a net long-term loss of $8,000. Which of the following statements are true?

By Peter Cherewyk AAA
A:

I. The short-term gain is fully taxable
II. $3,000 of capital loss is deductible against earned income
III. There is a long-term loss carried forward of $2,000
IV. There is no loss carried forward



A. I & III



B. I & IV



C. II & III



D. I, II, & III




Correct answer: C



The gain and the loss are netted and result in a $5,000 long-term loss. $3,000 of that can be used in the current year as a deduction against earned income, and there will be a carry forward of $2,000.



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