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.

RELATED FAQS
  1. If a sales representative moves from one broker-dealer to another ...

    The correct answer is b. I, II and III are correct since all parties are required to notify the Administrator. Read Answer >>
  2. Which of the following are tools that are employed by the Federal Reserve in its ...

    I. Moral suasionII. Changing the discount rateIII. Changing the reserve requirementIV. Changing the prime interest rate A. ... Read Answer >>
  3. Which statement(s) is/are FALSE about market risk?

    I. It is mitigated by writing calls.II. It includes the risk the investor will lose invested principal.III. It is the same ... Read Answer >>
  4. Which of the following statements is(are) true with respect to the factors that ...

    The correct answer is: c) (I) is incorrect because while he amount of new underwriting business that may be undertaken is ... Read Answer >>
  5. Which of the following are not types of open-end management investment companies ...

    The correct answer is d) Hedge funds are extremely aggressive entities that engage in margin and short-selling.  They are ... Read Answer >>
Related Articles
  1. Taxes

    How to Deduct Your Stock Losses

    Held onto a stock for too long? Selling at a loss is never ideal, but it is possible to minimize the damage. Here's how.
  2. Financial Advisor

    6 Proven Tips For Series 6 Success

    These techniques can help you pass this test without the added stress.
  3. Personal Finance

    Tips for Taking the CFA Exam: Part 1

    Peter Mackey, head of exam development for the CFA Institute, shares his tips for taking the CFA level I, II and III exams.
  4. Personal Finance

    The Benefits of Doing a 30-Day Financial Detox

    Taking 30 days to detox your finances can help reduce spending and increase financial independence.
  5. Investing

    7 Year-End Tax Planning Strategies

    Do you have a capital loss that could be booked and used to offset future tax liabilities? If so, it may be time to sell.
  6. Investing

    What's a Loss Carryforward?

    Loss carryforward is an accounting technique that applies a business’ net operating losses in one year to a future year’s profits.
  7. Trading

    The Art Of Cutting Your Losses

    Taking corrective action before your losses worsen is always a good strategy. Find out how to keep your capital losses small and let your winners run.
  8. Small Business

    Small Business Owners: How to Deal With Stress

    As a small business owner, it's important to find ways to deal with your work stress so you can enjoy life's ride.
RELATED TERMS
  1. Long-Term Capital Gain Or Loss

    A gain or loss from a qualifying investment owned for longer ...
  2. Capital Loss Carryover

    The net amount of capital losses that aren't deductible for the ...
  3. Casualty And Theft Losses

    Deductible losses stemming from the loss or destruction of the ...
  4. Net Loss

    The result that occurs when expenses exceed the income or total ...
  5. Recognized Loss

    When an investment or asset is sold for less than its purchase ...
  6. Short-Term Gain

    A capital gain realized by the sale or exchange of a capital ...
Hot Definitions
  1. Expense Ratio

    A measure of what it costs an investment company to operate a mutual fund. An expense ratio is determined through an annual ...
  2. Pro Forma

    A Latin term meaning "for the sake of form". In the investing world, it describes a method of calculating financial results ...
  3. Trumpcare

    The American Health Care Act, also known as Trumpcare and Ryancare, is the Republican proposal to replace Obamacare.
  4. Free Carrier - FCA

    A trade term requiring the seller to deliver goods to a named airport, terminal, or other place where the carrier operates. ...
  5. Portable Alpha

    A strategy in which portfolio managers separate alpha from beta by investing in securities that differ from the market index ...
  6. Run Rate

    1. How the financial performance of a company would look if you were to extrapolate current results out over a certain period ...
Trading Center