Question

Chad incurred capital gains and losses during the current year. He has a $7,000 net short-term capital gain; a $14,000 long-term capital loss in the 15% category; and a $10,000 long-term capital gain taxed at 28%. How will these transactions be taxed after the gains and losses are combined?

Answer 1

Answer:

$3,000 of net short-term capital gain will be taxed at marginal rates

Explanation:

The $14,000 long-term capital loss will offset the $10,000 long-term capital gain. The remaining $4,000 long-term capital loss can offset some of the net short term capital gain: $7,000 - $4,000 = $3,000