Elaine Case (single with no dependents) has the following transactions in 2017:

Question

Elaine Case (single with no dependents) has the following transactions in 2017: $240,000 22,000 (8,000) 19,000 (23,000) AGI (exclusive of capital gains and losses) Long-term capital gain Long-term capital loss Short-term capital gain Short-term capital loss a. Elaine has a net long-term capital gain of $ 22,000 | and a net short-term capital gain of As a result, she has an overall net capital of b. Complete the letter to Elaine describing how the net capital gain or loss will be treated on her tax return. Assume Elaine's income from other sources puts her in the 39.6% bracket. If required, round your answer to one decimal place. Maloney, Hoffman, Raabe, & Young, CPAs 5191 Natorp Boulevard Mason, OH 45040

Explanation / Answer

The purpose of this letter is to discuss the result of your stock transactions for 2017. You had$14,000 (net) of long-term capital gains and $4,000 (net) of short-term capital losses. Subtracting the $4,000 of losses from the $14,000 of gains resulted in a $10,000 net long-term capital gain.

The $10,000 net long-term capital gain and the details of your stock transactions will be reported on Form 8949 and then a summary will be carried to the Schedule D attached to your Form1040. The $10,000 net capital gain qualifies for the alternative tax on capital gains and will be taxed at a 20% rate rather than at your marginal tax rate of 39.6%

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