In 2014, Bluebird Corporation Had Net Income from Operations of $100,000

question 52

Multiple Choice

In 2014, Bluebird Corporation had net income from operations of $100,000. Further, Bluebird recognized a long- term capital gain of $30,000, and a short-term capital loss of $45,000. Which of the following statements is correct?

• A) Bluebird Corporation will have taxable income in 2014 of $100,000 and will have a net capital loss of $15,000 that can be carried back 3 years and forward 5 years.
• B) Bluebird Corporation may use the capital loss to offset the capital gain and must carry the net capital loss of $15,000 forward five years as a short-term capital loss.
• C) Bluebird Corporation may deduct $33,000 of the capital loss in 2014 and may carry forward the remainder of the capital loss indefinitely to offset capital gains.
• D) Bluebird Corporation will have taxable income in 2014 of $85,000.
• E) None of the above.

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