Question

In: Accounting

For the current year, Sarah has salary of 50,000. In addition, she has the following capital...

For the current year, Sarah has salary of 50,000. In addition, she has the following capital transactions:

Long-term capital gain (15%)         12,000

Short-term capital gain                     8,000

Long-term capital loss (28%)          (4,000)

Short-term capital loss                    (10,000)

What is her taxable income for the year? She has a short-term capital loss carry-over of 5,000 from the previous year. The standard deduction amount for her is 12,000

Question 6 options:

37,000

39,000

49,000

59,000

None of the above

Solutions

Expert Solution

Particulars Short-term Long-term
Collectible
Long-term
other
Gains $            8,000 $          12,000
Losses $        (15,000) $          (4,000) $                  -  
Net gain / (loss) $          (7,000) $          (4,000) $          12,000
Less: long-term capital loss $            4,000 $          (4,000)
Less: short-term capital loss $            7,000 $                  -   $          (7,000)
Balance $                  -   $                  -   $            1,000

Short-term capital losses include short-term capital loss carryover. Taxable income of taxpayer is:

Taxable income Amount
Salary $          50,000
Capital gains $            1,000
Gross income $          51,000
Deductions:
Standard deduction $        (12,000)
Taxable income $          39,000

Thus, taxable income is $39,000. Please rate the answer.


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