In 2018, Jordan had taxable income of $100,000. This amount included short-term capital losses of $1,000 and long-term capital losses of $10,000. He had no other capital transactions in prior years. What is Jordan's capital loss carryover to 2019? a. $0 b. $1,000 c. $8,000 d. $11,000

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Yair Frederick

20 November, 12:14

In 2018, Jordan had taxable income of $100,000. This amount included short-term capital losses of $1,000 and long-term capital losses of $10,000. He had no other capital transactions in prior years. What is Jordan's capital loss carryover to 2019? a. $0 b. $1,000 c. $8,000 d. $11,000

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Mia Ochoa · Answer 1

C) $8,000

Explanation:

The IRS established that you can deduct up to $3,000 in capital losses from current income. Any amount that exceeds that threshold must be carried forward so it can be deducted in the future. There is no limit as to how many years they can be carried over, the limit applies only to the amount.

Since Jordan's total capital losses were $11,000, he should have used $3,000 to offset his 2018 income. That means that he has $8,000 to carryover to 2019.