Ostrich, a C Corporation, Has a Net Short-Term Capital Gain

question 134

Essay

Ostrich, a C corporation, has a net short-term capital gain of $20,000 and a net long-term capital loss of $90,000 during 2019. Ostrich also has taxable income from other sources of $1 million. Prior years' transactions included the following: $$\begin{array} { l r } 2015 \text { net short-term capital gains } & \$ 20,000 \\2016 \text { net long-term capital gains } & 15,000 \\2017 \text { net short-term capital gains } & 25,000 \\2018 \text { net long-term capital gains } & 5,000\end{array}$$
a. How are the capital gains and losses treated on Ostrich's 2019 tax return?
b. Determine the amount of the 2019 net capital loss that is carried back to each of the previous years.
c. Compute the amount of capital loss carryover, if any, and indicate the years to which the loss may be carried.
d. If Ostrich were a proprietorship, how would Ellen, the owner, report these transactions on her 2019 tax return?

---

Definitions:

Hypothesis

A proposed explanation for a phenomenon, made as a starting point for further investigation, which can be tested through experimentation or observation.

Principle of Falsifiability

A criterion for scientific theories proposed by Karl Popper, stating that for a theory to be considered scientific, it must be able to be proven false.

Replication

The process of repeating a study or experiment to verify its findings.

Theory

A well-substantiated explanation of some aspect of the natural world, based on a body of facts that have been repeatedly confirmed through observation and experiment.