Ted is the sole shareholder of a C corporation,and Sue owns a sole proprietorship.Both businesses were started in 2010,and each business sustained a $5,000 net capital loss for the year.Which of the following statements is correct?
A)Ted's corporation can deduct the $5,000 capital loss in 2010.
B)Ted's corporation can deduct $3,000 of the capital loss in 2010.
C)Sue can carry the capital loss back three years and forward five years.
D)Sue can deduct the $5,000 capital loss against ordinary income in 2010.
E)None of the above.

Question

Quizplus · Accepted Answer

A C corporation cannot deduct capital losses against ordinary income; they can only offset capital gains. A sole proprietorship's capital losses are treated as personal losses, and individuals can only deduct up to $3,000 of capital losses against ordinary income per year, not $5,000.

Ted Is the Sole Shareholder of a C Corporation,and Sue