Question :

Consider the four independent situations below for an unmarried individual, and examine the effects of the capital gains and losses on the individual's AGI.          

                                                                   Situation 1      Situation 2     Situation 3      Situation 4

AGI (excluding property transactions)  $40,000          $50,000          $60,000           $70,000

Short-term capital gains (STCG)                6,000             2,000                5,000               6,000

Short-term capital losses (STCL)               2,000              5,000                4,000               15,000

Long-term capital gains (LTCG)                 3,500              15,000              10,000             9,000

Long-term capital losses (LTCL)                 2,500              4,000                12,000             4,000

Required:           

a. Evaluate the amount of net short-term capital gain (NSTCG) or net short-term capital loss (NSTCL).

b. Evaluate the amount of net long-term capital gain (NLTCG) or net long-term capital loss (NLTCL).        

c. Determine AGI after considering the capital gains and losses.

d. Recognize if in any of the four situations there is a loss carryforward.