Answer:
(B) Mark has a $3,000 capital loss deduction.
Explanation:
Based on the tax bracket proposed, we deteminate the 7,000 is a short-term gain
and the second a long term gain.
First we must offset short capital losses against short capital gains:
7,000 - 18,000 = 11,000 short-term loss
now we offset against long term, if it is gain it will be long term gain if loss short term loss:
6,000 - 11,000 = 5,000 short-term loss
Okay we end up with a total loss of 5,000 but; <u>we have a cap at 3,000 </u> . So that is all Mark can claim as a deduction in other categories against wages and salaries or to carry foward over next period
