Question

This year, Linda Moore earned a $112,000 salary and $2,200 interest income from a jumbo Certificate of Deposit.She recognized a $15,300 capital loss on the sale of undeveloped land. Assume the taxable year is 2016.Compute Linda's AGI and any capital loss carryforward into future years in each of the following cases:a. She also recognized a $10,500 capital gain from the sale of corporate stock.b. She also received a $16,000 capital gain distribution from a mutual fund.c. She had no other capital transactions this year, but has a $17,000 capital loss carryforward from a previous year.

Answer 1

Answer:

a) salary $112,000

Interest income $2,200

Capital gain on stock -

gross income $114,200

capital gains and losses

capital gain 10,500

capital loss 15,300

Net capital loss = 4800

net loss offset on Gross income = 3000

Net Gross income $111,200

capital loss that is carried forward = $1800

b) salary $112,000

Interest income $2,200

Capital gain on stock -

gross income $114,200

CAPITAL LOSSES/GAINS

capital gain 16000

capital loss 15300

Net Capital gain = 700  

ADD taxable capital gains on Gross income

c) salary $112,000

Interest income $2,200

gross income $114,200

capital losses/ gains

capital loss 15300

capital loss 17000

Total Capital LOSS = $ 32300

Set off against income = (3000)

Losses carried forward =$29300

Explanation:

Capital losses can be offset on normal Gross income but only up to $3000 per year