Question

John is owner of a sole proprietorship (Bogs Dogs) and shareholder of (Cop Tops). Both of these companies sold capital assets and experienced a $10,000 capital loss and neither had capital income. Evaluate the entities and determine if it can be deducted, how much, and on which return will the capital loss be able to deducted to reduce his taxable income related to the entity type. Which of the following statements best describes the tax treatment allowed for each entity. a Sole proprietorship 50 capital loss on personal return, Corporation 50 capital loss on entity return. Sole proprietorship 55,000 capital loss on entity return, Corporation $10,000 capital loss entity return. b. Sole proprietorship $3,000 capital loss on entity return Corporation $3,000 capital loss on entity return Sole proprietorship $3,000 capital loss on personal return. Corporation $capital loss on entity return od e. Sole proprietorship 53.000 capital loss on personal return, Corporation $3,000 capital loss on personal return.

Answer 1

D. Sole proprietorship $3,000 capital loss on personal return. Corporation $0 capital loss on entity return .

For capital losses passed through to your personal tax return John can claim the excess loss if it is the lesser of $3,000 ($1,500 if married filing separately) or your total net loss.