Colin is in the 35% tax bracket and reports the following capital transactions.
|
Penguin Corporation stock (held for 8 months) |
$1,000 |
|
Owl Corporation stock (held for 10 months) |
(3,000) |
|
Stamp collection (held for 5 years) |
2,000 |
|
Land (held as an investment for 3 years) |
4,000 |
The Penguin short term capital gain (STCG) of $1,000 is offset by the Owl short term capital loss (STCL) of $3,000. The remaining STCL of $2,000 then is applied against the collectible gain of $2,000. The end result is a net long term capital gain of $4,000 from the land sale, taxed at a 15% rate.