ACCT-4021EL Lecture Notes - Lecture 8: Carry Back
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Problem 17-37 (LO. 2)
During 2017, Gorilla Corporation has net short-term capitalgains of $15,000, net long-term capital losses of $105,000, andtaxable income from other sources of $460,000. Prior years'transactions included the following:
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If an amount is zero, enter "0".
a. How much is Gorilla's net capital loss for2017?
$
What is the amount of the capital loss deduction on Gorilla's2017 tax return?
$
Any excess net capital loss is carried back or forward as a.
b. Of the excess 2017 net capital loss, howmuch is carried back to the previous years?
$
c. Compute the amount of capital loss carryoverto 2018 and future years.
$
Indicate the years to which the loss may be carried. Select"Yes" or "No", which ever is appropriate.
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d. If Gorilla is a sole proprietorship, ratherthan a corporation, how would the owner report these transactionson her 2017 tax return?
Gorilla offsets $ of capital gains against her losses and anadditional $ in capital . The remaining $ is .
e. Assume that Gorilla Corporation’s capitalloss carryfoward in part (c) is $27,000 and that Gorilla will beable to use $11,000 of the carryover to offset capital gains in2018 and the remaining $16,000 to offset capital gains in 2019.
Assume the following:
A discount rate of 5%.
Present value factors - 1.000 for 2014-2016; 0.952 for 2018 and0.907 for 2020.
Gorilla Corporation’s marginal income tax rate is 34% for alltax years.
Round your computations to the nearest dollar.
In present value terms, determine the tax savings of the$105,000 long-term capital loss recognized in 2017.
$
John (a sole proprietor) and Eagle Corporation (a C corporation)each recognize a long-term capital gain of $10,000 and a short-termcapital loss of $18,000 on the sale of capital assets. Neithertaxpayer had any other property transactions during the year.
a. Regarding John's gains and losses, labeleach of the following as "True" a tax consequence or "False" not atax consequence.
1. John reports the capital transactions on his individual taxreturn and deducts a $18,000 net capital loss in the currentyear.
2. John reports the capital transactions on his individual taxreturn but is limited to a $3,000 net capital loss deduction in thecurrent year.
3. John nets the $10,000 LTCG against the $18,000 STCL.
Regarding Eagle Corporation's gains and losses, label each ofthe following as "True" a tax consequence or "False" not a taxconsequence.
1.
Eagle Corporation nets the $10,000 LTCG against the $18,000STCL, resulting in a $8,000 net capital loss. 2.
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