Studios Reported a Net Capital Loss of $38,500 in Year

question 21

Multiple Choice

Studios reported a net capital loss of $38,500 in Year 5. It reported net capital gains of $31,000 in Year 4 and $44,000 in Year 6. What is the amount and nature of the book-tax difference in Year 6 related to the net capital carryover?

• A)$36,500 unfavorable.
• B)$36,500 favorable.
• C)$7,500 unfavorable.
• D)$7,500 favorable.

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