During 2018, Crown Corporation, a calendar year C corporation, has net short-term capital gains of $50,000,...

During 2018, Crown Corporation, a calendar year C corporation, has net short-term capital gains of $50,000, net long-term capital losses of $80,000, and taxable income from other sources of $270,000. Prior years' transactions included the following. 2014 net short-term capital gains $12,000 2015 net long-term capital gains 10,000 2016 net short-term capital gains 9,500 2017 net long-term capital gains 7,000 If an amount is zero, enter "0".

a. How much is Crown's net capital loss for 2018? $ What is the amount of the capital loss deduction on Crown's 2018 tax return? $ 0 Any excess net capital loss is carried back or forward as a short-term capital loss .

b. Of the excess 2018 net capital loss, how much is carried back to the previous years? $

c. Compute the amount of capital loss carryover to 2019 and future years. $

Solutions

Expert Solution

(a) Crown Corporation's net capital loss for the assessment year 2018 is $73000($80000-$7000), as the losses can be carried back only for a period of 2 years from the assessment year and long-term capital loss can only be set-off against the head long term capital loss only, which is $7000 for the year 2017.

The amount of capital loss deduction is $7000, as long-term capital losses are carried back for maximum period of 2 years from the asessment year. Therefore, Crown Corporation is elegible for a tax refund of $7000 .

(b) A maximum amount of $7000 is carried back from the total long-term capital loss 0f $80000. As the long-term capital losses can be carried back for maximum of 2 years from the assesment year and set-off against the head long-term capital gain only. (the other gains provied are either short-term capital gains or beyond the period of 2 years from the assessment year)

(c) An amount of $73000 ($80000-$7000) will be carried forward to financial year 2019 and further for next 8 assessment year and will only be set-off against long-term capital gain only.

ekkarill92 answered 1 year ago

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