LO.1 During 2023, Gorilla Corporation, a calendar year C corporation, has net short-term capital gains of $15,000, net long-term capital losses of $105,000, and taxable income from other sources of $460,000. Prior years' transactions included the following: 2019 net short-term capital gains 2020 net long-term capital gains 2021 net short-term capital gains 2022 net long-term capital gains a. How are the capital gains and losses treated on Gorilla's 2023 tax return? b. Determine the amount of the 2023 capital loss that is carried back to each of the previous years. $40,000 18,000 25,000 20,000 c. Compute the amount of capital loss carryforward, if any, and indicate the years to which the loss may be carried. d. e. If Gorilla is a sole proprietorship rather than a corporation, how would these transactions be reported in the proprietor's 2023 tax return? Assume that Gorilla Corporation's capital loss carryforward in part (c) is $27,000 and that Gorilla will be able to use $11,000 of the carryover to offset capital gains in 2024 and the remaining $16,000 to offset capital gains in 2025. In present value terms, determine the tax savings of the $105,000 long-term capital loss recognized in 2023. Assume a discount rate of 5% (present value factors are in Appendix E). Create a spreadsheet using Microsoft Excel (or a similar software program) that summarizes your analysis.
LO.1 During 2023, Gorilla Corporation, a calendar year C corporation, has net short-term capital gains of $15,000, net long-term capital losses of $105,000, and taxable income from other sources of $460,000. Prior years' transactions included the following: 2019 net short-term capital gains 2020 net long-term capital gains 2021 net short-term capital gains 2022 net long-term capital gains a. How are the capital gains and losses treated on Gorilla's 2023 tax return? b. Determine the amount of the 2023 capital loss that is carried back to each of the previous years. $40,000 18,000 25,000 20,000 c. Compute the amount of capital loss carryforward, if any, and indicate the years to which the loss may be carried. d. e. If Gorilla is a sole proprietorship rather than a corporation, how would these transactions be reported in the proprietor's 2023 tax return? Assume that Gorilla Corporation's capital loss carryforward in part (c) is $27,000 and that Gorilla will be able to use $11,000 of the carryover to offset capital gains in 2024 and the remaining $16,000 to offset capital gains in 2025. In present value terms, determine the tax savings of the $105,000 long-term capital loss recognized in 2023. Assume a discount rate of 5% (present value factors are in Appendix E). Create a spreadsheet using Microsoft Excel (or a similar software program) that summarizes your analysis.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:LO.1 During 2023, Gorilla Corporation, a calendar year C corporation, has net short-term capital gains of $15,000, net long-term capital losses of
$105,000, and taxable income from other sources of $460,000. Prior years' transactions included the following:
2019 net short-term capital gains
2020 net long-term capital gains
2021 net short-term capital gains
2022 net long-term capital gains
a.
How are the capital gains and losses treated on Gorilla's 2023 tax return?
b.
Determine the amount of the 2023 capital loss that is carried back to each of the previous years.
$40,000
18,000
25,000
20,000
c. Compute the amount of capital loss carryforward, if any, and indicate the years to which the loss may be carried.
d.
e.
If Gorilla is a sole proprietorship rather than a corporation, how would these transactions be reported in the proprietor's 2023 tax return?
Assume that Gorilla Corporation's capital loss carryforward in part (c) is $27,000 and that Gorilla will be able to use $11,000 of the carryover to
offset capital gains in 2024 and the remaining $16,000 to offset capital gains in 2025. In present value terms, determine the tax savings of the
$105,000 long-term capital loss recognized in 2023. Assume a discount rate of 5% (present value factors are in Appendix E). Create a
spreadsheet using Microsoft Excel (or a similar software program) that summarizes your analysis.
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