Andy has the following capital gains and losses during the current year:
$\begin{array}{lc}
\text { Short-term capital gain } & \$ 4,000 \
\text { Short-term capital loss } & (9,000) \
\text { Collectibles loss } & (2,000) \
\text { Long-term capital gain } & 1,000
\end{array}$
Andy's capital gains and losses will
A)Increase taxable income by $2,000.
B)Decrease taxable income by $6,000.
C)Decrease taxable income by $3,000.
D)Decrease taxable income by $4,000.

Question

Quizplus · Accepted Answer

The net short-term capital loss is $5,000 ($4,000 gain - $9,000 loss). The net long-term capital gain is $1,000. The collectibles loss is $2,000. The total net loss is $6,000 ($5,000 short-term loss + $2,000 collectibles loss - $1,000 long-term gain). Only $3,000 of this net loss can be used to decrease taxable income in the current year.

Andy Has the Following Capital Gains and Losses During the Current