Question

Carrot Corporation, a C corporation, has a net short-term capital gain of $240,000 and a net long-term capital loss of $230,000 during 2018. Carrot Corporation had taxable income from other sources of $720,000 during 2018. Carrot corporation had the following gains and losses during the years it had been in existence:

2014 Net long-term capital loss $30,000

2015 Net short-term capital gain 45,000

2016 Net short-term capital loss 100,000

2017 Net long-term capital gain 15,000

Compute the amount of Carrot’s capital loss carryover to 2019.

a. $15,000

b. $35,000

c. $60,000

d. $80,000

e. $95,000

Answer 1

The computation of the amount of carrot's capital loss carryover to 2019 is: $(60,000)

Net short-term capital gain for 2018 = $240,000
Net long-term capital loss for 2018 = $(230,000)
Net Capital Gain = $10,000

The net capital gain of $10,000 will be adjusted back with the preceding years gain/loss of 2014, 2015, 2016 & 2017.

Net capital gain of 2018    $10,000

Onset/Offset against,

2014, net long term capital loss $(30,000)

2015, net long term capital gain $45,000

2016, net long term capital loss $(100,000)

2017, net long term capital gain $15,000

Total carryback $(70,000)

The carrot's capital loss carryover is $(60,000) = ($10,000 - $70,000), which would be carried over to 2019, 2020, 2021, 2022, 2023