Question

During the year, Nate and Olivia, a married couple filing jointly, had ordinary income totaling $60,000. In addition, they had short-term capital losses of $2,000 and long-term capital losses of $8,600. What amount can Nate and Olivia report as a long-term capital loss carryover to the following year?

A. 5.6k

B 6.8k

C 7.6k

D 0

Answer 1

ANSWER

For taxpayers who are married couple and filing jointly, the limit for netting of capital losses is $3,000

If both long term and short term capital losses are involved, netting should be made first for short term capital loss and then long term capital loss.

S.No	Particulars	Amount ($)
A	Total Limit for Netting of Capital Loss	3,000
B	Less: Net off Short Capital Loss	(2,000)
C	Balance Net off available for Long Term Capital Loss (A-B)	1,000
D	Long Term Capital Loss	8,600
E	Long Term Capital Loss Carryover (D-C)	7,600

So, Long Term Capital Loss Carryover is $ 7,600 i.e. C 7.6K.