Question

Mr. Imhoff recognized a $25,700 net long-term capital gain and a $33,000 net short-term capital loss this year. What is his current year tax savings from the capital loss if his marginal rate on ordinary income is 35% and his preferential rate on adjusted net capital gain is 20%?

Answer 1

Answer:

$0

Explanation:

The computation of the current year tax saving from the capital loss is as follows:

= (Long term capital gain - short term capital loss) × difference in the tax rate

= ($25,700 - $33,000) × 0.15

= -$7,300 × 0.15

As there is no current year saving since the net short term capital loss is more than the long term capital gain

So the saving would be zero