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Capital Gains and Losses

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During 2007, Gorilla Corporation has net short-term capital gains of $90,000, net long term capital losses of $570,000, and taxable income from other sources of $1.5 million. Prior years' transactions included the following:

2003 Net short-term capital gains $300,000
2004 Net long term capital gains $120,000
2005 Net short term capital gains $90,000
2006 Net long term capital gains $210,000

A) How are capital gains and losses treated on Gorilla's 2007 tax return?

B)Determine the amount of the 2007 capital loss that is carried back to each of the previous years.

C) Compute the amount of capital loss carryover, if any, and indicate the years to which the loss maybe carried.

D) If Gorilla is a sole proprietorship, rather than a corporation, how would Leslie (the owner) report these transactions on her 2007 tax return?

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This solution contains calculations of gains and losses of corporations.

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A. The capital gains and losses are reported on Schedule D of Gorilla's 2007 1120 corporate tax return. The capital transactions will be grouped according to either long term or short term status. Long term items will offset long term items in the current year. Short term items will be offset gains each other. The net gains and losses of the various groups will be reported. The ...

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