[needhelpnow]

Bobby Bell, married filing jointly, has adjusted gross income of $62,000 (including his salary and his wife’s salary, interest, and dividends). In addition, Bobby and his wife had a capital loss of $8,000 and capital gains of $5,000 and $1,000. What is Bobby’s adjusted gross income after considering the capital gains and losses?

Answer: Bobby is able to offset his capital gains of $6,000 against his capital losses of $8,000 to end with a net capital loss of $2,000.

The loss is less than the $3,000 annual limit allowed for offsetting ordinary income ($62,000 – $2,000 = $60,000).

~~~

I don’t understand this last statement. Isn’t individual allowed $3000 deduction against Capital? Then Why are they not deducting it here. Is there are rule that if loss is less than 3k, you cannot take the deduction? Please help. Thank you!

[Jeff_A]

I think maybe the question is written poorly. The allowable deduction is 3000. After netting capital gains and losses, 2000 is below the maximum allowable deduction, and therefore allowed.

FAR- 83
BEC- 85
REG- 79
AUD- 91

[Author]

Replies