Determining Nancy's Financial Situation After Selling Stock

What is the true statement regarding Nancy's financial situation after selling XYZ stock?

Calculating Nancy's Capital Gain or Loss

Nancy's financial situation after selling XYZ stock: Nancy sold the stock for $20,000, which she purchased nine months ago for $25,000. This results in a capital loss of $5,000.

Evaluating Each Statement

Nancy has an ordinary loss of $5,000: This statement is not true as the loss from selling the stock is classified as a capital loss, not an ordinary loss.

Nancy has a capital loss carryforward of $5,000: This statement is not true since there's no information about Nancy's other capital gains or losses to determine if there's an excess that can be carried forward.

Nancy has a deductible capital loss of $5,000: This statement is not true because the deductible limit for capital losses against ordinary income is $3,000 per year. Nancy's capital loss of $5,000 exceeds this limit.

Nancy has a deductible capital loss of $3,000: This statement is true. Despite having a capital loss of $5,000, Nancy can only deduct up to $3,000 against ordinary income each year. The remaining $2,000 can be carried forward.

Therefore, the true statement is that Nancy has a deductible capital loss of $3,000 in her financial situation after selling the stock.

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