Question

Todd Johnson had the following items of income and losses during the tax year:

Answer 1

Answer:

b. $700

Explanation:

Todd's capital gains = -$1,000 (bad debt) - $2,000 (gain on commodities held for 2 years) - $800 (loss on stock held for 2 years) - $4,500 (flood damage) + $5,000 (gain on stocks held for 13 months) = $700

Capital losses due to federally declared natural disasters can offset capital gains.

Answer 2

Answer:

Todd Johnson

Todd's taxable capital gain for the tax year is:

d. $6,200

Explanation:

a) Data and Calculations:

Gain on commodities held 16 months $2,000

Loss on stock held 2 years                    $(800)

Gain on stock held 13 months             $5,000

Net Capital Gains (Long-term)             $6,200

b) A capital gain or loss exists on property such as a home, car, and investment property, like stocks and bonds when is sold. Short-term capital gain or loss is differentiated from long-term capital gain or loss.  Usually, long-term capital gain or loss is calculated for assets held more than a year before disposal, while short-term gain or loss is calculated separately for assets sold within a year of being held.