Ryan has the following capital gains and losses for 2017: $6,000 STCL, $5,000 28% gain, $2,000 25% gain, and $6,000 0%/15%/20% gain. Which of the following is correct:
a. The net capital gain is composed of $1,000 25% gain and $6,000 0%/15%/20% gain.
b. The net capital gain is composed of $5,000 28% gain and $2,000 0%/15%/20% gain.
c. The net capital gain is composed of $3,000 28% gain, $2,000 25% gain, and $2,000 0%/15%/20% gain.
d. The net capital gain is composed of $1,000 28% gain and $6,000 0%/15%/20% gain.
e. None of the above.
a
RATIONALE: The $6,000 STCL first offsets the highest tax rate gain, then any remaining loss offsets the next highest tax rate gain. Thus, $6,000 STCL – $5,000 28% gain – $1,000 25% gain leaves $1,000 25% gain and $6,000 0%/15%/20% gain.
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