Discuss AICPA CPA-Regulation Exam Topic 3 Question 51

Tom and Joan Moore, both CPAs, filed a joint 1994 federal income tax return showing $70,000 in taxable income. During 1994, Tom's daughter Laura, age 16, resided with Tom. Laura had no income of her own and was Tom's dependent.

Determine the amount of income or loss, if any that should be included on page one of the Moores' 1994 Form 1040.

The Moores had no capital loss carryovers from prior years. During 1994, the Moores had the following stock transactions, which resulted in a net capital loss:

Suggested Answer: J

'J' is correct. $3,000. The capital loss on Revco ($10,000 loss) is added to the capital gain on Abbco ($4,000) to produce a net capital loss of ($6,000). The Moores can claim $3,000 of the loss on their 1994 income tax return and carry the balance forward to 1995.

12 comments · newest first

Harris 11 months ago

Totally agree, it's all about those loss limits!

Audra 11 months ago

Wait, they can only deduct $3,000? That seems low!

Alex 12 months ago

Definitely $0, they can't carry over losses this year.

Frederick 12 months ago

I think it should be $1,000 based on the loss limits.

Vanda 12 months ago

The Moores had a net capital loss, so they can only deduct $3,000 against ordinary income.

Tish 1 year ago

I’m pretty sure the total capital loss is $1,300, and they can only deduct $1,000 this year. So, I think the answer is $1,000.

Dolores 1 year ago

This question is similar to one we practiced where we had to calculate net capital gains and losses. I feel like the answer might be $1,000, but I’m not completely confident.

Ryan 1 year ago

I think the Moores can only deduct a portion of their capital loss against their ordinary income, but I can't recall the exact amount.

Tamera 1 year ago

I remember something about capital losses being limited to $3,000 per year for individuals, but I'm not sure how that applies here.

Toi 1 year ago

Hmm, I'm a bit confused by the wording here. I'll need to review my notes on querying and index levels to make sure I understand the right approach.

Dacia 1 year ago

I'm not sure about this one. Could it be a bandwidth issue, even with the high-speed link?

Glen 1 year ago

Wait, I'm confused. Wouldn't an inventory of services not dependent on the cloud provider also be important, in case the cloud goes down?

AICPA CPA-Regulation Exam - Topic 3 Question 51 Discussion