Question

Dallas Corporation, not a dealer in securities, realizes taxable income of $60,000 from the operation of its business. Additionally, in the same year, Dallas realizes a long-term capital loss of $10,000 from the sale of marketable securities. If the corporation realizes no other capital gains or losses, what is the proper treatment for the $10,000 long-term capital loss on the tax return? Carry the $10,000 long-term capital loss back three years as a short-term capital loss, then forward five years. Use $10,000 of the long-term capital loss to reduce taxable income. Use $6,000 of the loss to reduce taxable income and carry $4,000 of the long-term capital loss forward for five years. Use $3,000 of the loss to reduce taxable income and carry $7,000 of the long-term capital loss forward for five years.

Answer 1

Question 4:

Dallas Corporation, not a dealer in securities, realizes taxable income of $ 60000 from the operation of its business, additionally, in the same year, Dallas realizes a long term capital loss of $ 10,000 from the sale of marketable securities, if the corporation realizes no other capital gains or losses, what is the proper treatment for the $ 10,000 long term capital loss on the tax return

Answer 4:

Use 3,000$ of the loss to reduce taxable income and carry 7,000$ of the Long term capital loss forward for five years.

As per Federal law, the realize capital loss can be adjusted up to 3,000$ against ordinary income.

Question 5:

Bread Corporation is a C corporation with earnings of $1,00,000, it paid $20,000 in dividends to its sole shareholder, Gerald, Gerald also owns 100% of Butter corporation, an S corporation Butter had net taxable income of $80000 and made of $15,000 distribution to Gerald. What income will Gerald report from Bread and Butter activities.

Answer 5:

35,000$

Gerald Income = 20,000$ from Bread Corporation + 15,000$ from Butter Corporation

                            = 35,000$