This changes our Net STCL to a STCG of 1K which changes our Net Capital Loss

# This changes our net stcl to a stcg of 1k which

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This changes our Net STCL to a STCG of \$1K which changes our Net Capital Loss from \$10K to \$7K (\$8 -\$1K) o Per 1212(b)(1)(B) this \$7K is then treated as a LTCL in the succeeding taxable years o I’m not sure what happens after this, Get from Class Class Notes: - First Identify that there is NO way you are analyzing a capital gain o Step back and see if you have more losses than gains or more gains than losses. - Could you ever have a Net Capital Gain if you didn’t have any long- term capital gains. o N0, b/c under 1222(11), it’s the excess of net long-term capital gain over the net of short term capital loss - Next analyze under §1211 o YEAR 1 o We have \$7K of losses and \$4,600 in gains o §1211 says we can deduct losses to the extent we have gains Therefore we can deduct \$4,600 (this leaves us w/ \$2,400) o Then per §1211(b) we can deduct up to \$3K in excess of the gains and because we only have \$2,400 we can deduct it all - Year 2: o We have 14,000 in losses and \$4K in gains o We must first net the losses against our gains which is 14K versus \$4K leaving us w/ \$10K o Next in 1211(b) we can deduct the lesser of \$10K (the remaining) or \$3), so we can deduct \$3K leaving us w/ \$7K
1 o This means when all is said and done, we will have \$4K in gains and \$7K losses, leaving: \$7K is our NCL The only reason we want to know our NCL is to see what can be carried over to next year. o We can then deduct the losses to the extent we have gains. This means of the \$7K we can deduct \$4K (what we have in gains). This means we will have \$3K left that cannot be deducted. o However per _____ we can deduct the \$3K carryover in subsequent years. - If we have a NCL defined by 1222, we can deduct those losses as a carryover loss under 1212(b) - For the purposes of this class we don’t need to know whether a carryover is considered long term or short term loss