In 2017, Jenny Had a $12,000 Net Short-Term Capital Loss

question 158

Multiple Choice

In 2017, Jenny had a $12,000 net short-term capital loss and deducted $3,000 as a capital loss deduction. In 2018, Jenny has a $18,000 0%/15%/20% long-term capital gain and no other capital gain or loss transactions. Which of the statements below is correct for 2018?

• A) Jenny has a $18,000 net capital gain.
• B) Jenny has a $9,000 net capital gain.
• C) Jenny has a $9,000 net capital loss.
• D) Jenny has a $3,000 capital loss deduction.
• E) Jenny has a $9,000 capital loss deduction.

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Definitions:

Fixed Overhead

The total of all overhead costs that do not change in response to activity levels in the short term, such as rent and salaries.

Gross Profit

The difference between sales revenue and the cost of goods sold before deducting operating expenses, interest, and taxes.

Period

A specific duration of time used for financial reporting and analysis, typically a fiscal quarter or year.

Cost of Goods Sold

Direct expenditures linked to the creation of goods sold by a business.