Question

USA Federal Taxation
(Capital Gains and Losses – Introduction).
In 2018, Steven Spielberg (single) has $5,000 of net short-term capital loss and $17,000 of net long-term capital loss. In 2019, he has $2,000 of net short-term capital gain, $8,000 of net 28% long-term capital gain, and $4,000 of net 0%/15%/20% long-term capital gain.

Determine the type (short-term or long-term) and amount of capital loss to be carried forward to 2019 and 2020, respectively.

Show your steps.

Answer 1

Total carried forward loss = Net Short term Capital loss+Net Long term capital loss

= $5,000+$17,000

=$22,000

Hence,capital loss is to be carried forward to 2019 =$22,000

In 2019:

Now set off from short term gain

=$2,000 of net short-term capital gain + $8,000 of net 28% long-term capital gain+and $4,000 of net 0%/15%/20% long-term capital gain.

=$2000+2240+1400

yearly limit for single, household, widow, married filling jointly is 3000, and if in any year net loss is over from capital gain then it is to be forwarded to next year, and set off as if it is incurred in that next year.

Hence

First 2000 of short term is set off from short term gain

And next 1000 of short term is set off against 0%/15%/20% long term capital gain

Then,For 2020 carried forward from 2018 will be 2000(short term), 17000 (Long term) Loss.