Question

it can be answered with information given

Answer 1

AGI (Including property)

45,000

STCL to be carried forward

5,500

LTCL to be carried forward

-

Working Notes :

1. Short-term Capital Gains :

STCG

2,750

Less : STCL set-off

2,750

STCG to be included in AGI

-

2. Long-term Capital Gains :

LTCG

8,750

Less : LTCL set-off

6,500

Less : STCL set-off

2,250

STCG to be included in AGI

-

3. Calculation of STCL to be carried forward

STCL before set-off

10,500

Less : Set-off from STCG

2,750

Less : Set-off from LTCG

2,250

STCL to be carried forward

5,500

4. Calculation of LTCL to be carried forward

LTCL before set-off

6,500

Less : Set-off from LTCG

6,500

LTCL to be carried forward

-

Note : Following concepts have been used while solving the above problem :

1. STCL can be set-off from with LTCG and STCG

2. LTCL can only be set-off with LTCG

3. STCL/LTCL cannot be used fro setting-off income from any other sources. Balance STCL/LTCL is to be carried forward.

4. There is no rule regarding priority of using STCL or LTCL first for setting off LTCG, however in order to save tax, one should always use LTCL first since STCL can be set-off against both LTCG and STCG whereas LTCL can only be set-off against LTCG.