[mitchmatch]

Can someone please explain the difference between the two questions.

Stahl, an individual, owns 100% of Talon, an S corporation. At the beginning of the year, Stahl’s basis in Talon was $65,000. Talon reported the following items from operations during the current year:

Ordinary loss $10,000

Municipal interest income 6,000

Long-term capital gain 4,000

Short-term capital loss 9,000

What was Stahl’s basis in Talon at year-end?

A.

$50,000

B.

$55,000

correct C. $56,000

D.

$61,000

answer

asis at beginning of year $ 65,000

Ordinary loss -10,000

Municipal interest income 6,000

Long-term capital gain 4,000

Short-term capital loss – 9,000

---

Basis at end of year $ 56,000

and

A corporate taxpayer’s capital gains and losses are as follows:

Short-term capital gain $7,000

Short-term capital loss (43,000)

Long-term capital gain 9,000

Long-term capital loss 21,000

What amount of capital loss deduction is the taxpayer entitled to use to offset against ordinary income?

Correct A.

$0

B.

$3,000

C.

$12,000

D.

$48,000

All short term capital gains and losses are netted together and then all long term capital gains and losses are netted together. Then the short term is netted with the long term.

For this corporate taxpayer, the short term capital items net to $36,000 capital loss. The long term items net to $12,000 capital loss. As the taxpayer does not have any capital gains to offset against the capital losses, none of the capital losses may be used to reduce business ordinary income per tax law, answer A. The capital losses may be carried back to offset capital gains for three years and forward five years

Im clearly missing something, in the first one you dont net them out to compute basis. But in the second question you do net out the capital gains and losses in order to compute whether or not you can offset taxable income?

Any help is appreciated!

FAR-76 First attempt.
AUD-79 First attempt.
REG-79 First attempt.
BEC-79 First attempt.

Done!

BECKERS