Determine the tax effects of the indicated losses for the Yellow Estate for both tax years. The estate holds a variety of investment assets, which it received from the decedent, Mrs. Yellow. The estate’s sole income and remainder beneficiary is Yellow, Jr. All
taxpayers use a calendar tax year
|
Tax Year |
Loss Generated |
|
2012 (first tax year) |
Taxable income ($300) |
|
Capital loss ($12,000) |
|
|
2013 (final tax year) |
Taxable income, all |
|
classified as ordinary |
|
|
($20,000) |