Ophelia had the following capital transactions for the year: Acquired Item Sold
ID: 2596118 • Letter: O
Question
Ophelia had the following capital transactions for the year:
Acquired
Item
Sold
Selling Price
Cost
9/13/96
Stock
7/13/15
$4,000
$4,500
6/20/1991
Stock
9/30/15
$5,000
$2,000
7/1/2015
Stock
9/30/15
$1,000
$1,100
In addition, Ophelia has a long-term capital loss carryover from 2014 of $1,800. What is Ophelia’s 2015 net capital gain? (I believe the answer is D becasue you have 2,500 of Long term capital Gain - 1,800 of Long term capital loss = 700 - 100 short term capital loss = 600. PLEASE EXPLAIN IN WORDS!!!!)
A. $2,400
B. $800
C. $700
D. $600
E. None of the above
Acquired
Item
Sold
Selling Price
Cost
9/13/96
Stock
7/13/15
$4,000
$4,500
6/20/1991
Stock
9/30/15
$5,000
$2,000
7/1/2015
Stock
9/30/15
$1,000
$1,100
Explanation / Answer
Answer is "D"
$600
Capital gain consist two types of capital gains.1) Long term capital gain and 2) Short term capital gain
When the holding period of capital asset is less than 1 year than such capital gain/loss is treated as Short term capital gain and when It is more than one year than it is treated as long term capital gain.
Total capital gain for the year is being calculated by below mentioned formula.
Total Short term capital gain + total long term capital gain - set off of previous years capital loss.
In current case
Short term capital loss/gain is = $1000- $1100 = -$ 100
Long term capital gain =($4000-$4500)-($5000-$2000) = $2500
Previous yera's carried forward capital loss =$1800
Net capital gain for the year 2015 =( - $100+$2500-$1800)= $600
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.