Goose Corporation, a C corporation, incurs a net capital loss of $12,000 for 2020. It also...

Goose Corporation, a C corporation, incurs a net capital loss of $12,000 for 2020. It also has ordinary income of $10,000 in 2020. Goose had net capital gains of $2,500 in 2016 and $5,000 in 2019.

Answer the following:

a. Determine the amount, if any, of the net capital loss of $12,000 that is deductible in 2020.

b. Determine the amount, if any, of the net capital loss of $12,000 that is carried forward to 2021.

Please show all calculations and explain. Thank you.

Solutions

Expert Solution

For corporations, capital losses can only offset capital gains and not ordinary income.The capital loss can be carried back for up to 3 years and carried forward for 5 years.Net capital loss in 2020: (12,000)

Carried back years in this order: 2017, 2018, and 2019

The ordinary income of $10,000 in 2020 would not make any difference here since again, capital losses for corporations can only offset capital gains.So then in 2020, none of the capital losses will be deductible simply because there are no capital gains in 2020

.b.

Determine the amount, if any, of the net capital loss of $12,000 that is carriedforward to 2021.If capital losses are still remaining after carry back, then they can be carried forward in this order:2021, 2022, 2023, 2024and 2025.Goose Corporation does have capital gains of $5,000 in 2019.

Of the $12,000 net capital loss,$5,000 is carried back to 2019,and deductible against the $5,000 net capital gain of that year. The remaining $7,000($12,000 – $5,000) of the net capital loss is carried forward to 2021

ekkarill92 answered 1 year ago

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