[lonestar]

I’m using Wiley 2016. The example on Page 623 totally got me perplexed.

It states as below

“For 2014, a single individual with no dependents had a net captial loss of $8,000, and had allowable deductions that exceeded gross income by $4,000. For 2014, the individual is entitled to a net capital loss deduction of $3,000, and will carry over a net capital loss of $5,050 to 2015. This amount presents the 2014 net capital loss of $8,000 reduced by the lesser of (1) $3,000, or (2) -$4,000 + $3,000 + $3,950 personal exemption = $2,950.”

So this year’s capital loss deduction is $3,000 and the carryover is $5,050 and the total is $8,050, greater than the total capital loss of $8,000?

Is this right? Please help!!! Thanks much!

[monikernc]

i have not seen a problem like this but it makes sense. look at this way. the total of 8000 + 4000 = 12000. 12000 – 3950 = 8050. 8050 – 3000 = 5050. he can take his 3000 net loss carryforward from the 8000. plus, he can carryforward his excess deductions after deducting his personal exemption for this year.

FAR 7/25/15 76!
AUD 10/30/15 93
BEC 2/27/16 82
REG 5/23/16 88!
Ninja Book and MCQ and the forum - all the way!!!
and a little thing i like to call, time and effort!
if you want things to change, you have to do something different

[lonestar]

Thanks @monikernc

I kinda of got what you mean also kinda of lost in what you said…

[monikernc]

the taxpayer has a total of 12,000 in potential carryforwards this year. of that, from the 8000 of capital loss, 3000 can be applied to this year. 8000 – 3000 leaves 5000 to carryforward to next year. taxpayer also has 4000 in excess deductions, 3950 of which is the personal exemption – that will be used this year and won't carryover to next year but the other $50 will. 5000 + 50 = 5050 in carryforwards. 12000 – 3950 – 3000 = 5050.

i am just laying it out this way because you seemed to think the 8050 was too much. as the solution says to get to the right answer you have to do that “lessor of” check. i just want you to see that the taxpayer is starting with 12000 not just 8000.

FAR 7/25/15 76!
AUD 10/30/15 93
BEC 2/27/16 82
REG 5/23/16 88!
Ninja Book and MCQ and the forum - all the way!!!
and a little thing i like to call, time and effort!
if you want things to change, you have to do something different

[lonestar]

@monikernc

I owed you a ‘Thank-you' for this long. Had been busy with preparing the test and didn't reply to you in time on this thread. Now I passed all CPA exams. Another 71 is a nice place. Thank you again.

[Author]

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