[Anonymous]

Becker Question –

The solution doesn’t explain why you were only able to deduct a maximum of $3,000 from the capital loss on investment stock sale. I’m still in R1 and was wondering if it will be explained in in subsequent chapters. Can someone explain to me?

Current year Jensen has the following items:

Salary 50,000

Inheritance 25,000

Alimony from ex spouse 12,000

Child support from ex spouse 9,000

Capital loss from investment stock sale (6,000)

What is current year AGI?

Answer: 59,000

50,000

12,000

(3,000) max deductible from capital loss

= 59,000

[nfs480]

Individuals can only deduct $3,000 of Capital Losses in excess of capital gains. That's an arbitrary rule in the IRC. Since they had no capital gains they can only deduct the $3,000 of the losses and the rest is carried forward to the next year.

FAR 93
AUD 89
REG 81
BEC 87
Ethics 100

Becker 2012 Self-Study

[Anonymous]

Thanks 🙂

[giantsrangers]

And don't let them trick you with corporations. Corporations can carry back 3 years and carry forward 5, they cannot deduct 3,000 like an individual.

R: pass F: B: A:

[Anonymous]

I found the area where it explains it in R1. There's no carry back and you can carry forward for an unlimited time frame until exhausted.

[Author]

Replies