Question

68% Show Window Help Search Chapter 5 tions Slide Show Review View y Conv Sma Sharon's Capital Asset Sales Sharon has salary income of $68,000, a net long-term capital gain of $15,000, and a net short-term capital loss of $24,000. What is Sharon's adjusted gross income if she has no other income items?

Answer 1

Long-term capital gain is $15,000 and short-term capital loss is $24,000. Therefore, $15,000 of short-term capital loss can be set-off against long-term capital gain.

Sharon can claim an additional deduction of $3,000 on account of short-term capital loss from his salary income.

Therefore,

Sharon's adjusted gross income

= Salary income + Long-term capital gain - set-off of short-term capital loss - additional deduction for short-term capital loss

= $68,000 + $15,000 - $15,000 - $3,000

= $65,000

Thus, Sharon's adjusted gross income is $65,000.

The remaining short-term capital loss of $6,000 can be carried forward to future years.