can you explain step $2?$ I did n$\text{'}$t understand how you got $3000$ for net short term capital loss deduction and net long term capital loss deduction The Howells received a Form $1099-$B from the Vanguard mutual fund reporting a $$900$ long$-$term capital gain

distribution. This distribution was reinvested in $31$ additional Vanguard mutual fund shares on $6/30/2023.$

In $2017,$ Mrs$.$ Howell loaned $$6,000$ to a friend who was starting a new multilevel marketing company called LD$3.$ The

friend declared bankruptcy in $2023,$ and Mrs$.$ Howell has been notified she will not be receiving any repayment of the

loan.

The Howells have a $$2,300$ short$-$term capital loss carryover and a $$4,800$ long$-$term capital loss carryover from prior

years.

The Howells did not instruct their broker to sell any particular lot of IBM stock.

The Howells earned $$3,000$ in municipal bond interest, $$3,000$ in interest from corporate bonds, and $$4,000$ in

qualified dividends.

Assume the Howells have $$130,000$ of wage income during the year.

a$-3.$ Compute the Howells' tax liability for the year $($ignoring the alternative minimum tax and any phase$-$out provisions$)$ assuming they

file a joint return, they have no dependents, they don't make any special tax elections, and their itemized deductions total $$30,000.$

$($Use the tax rate schedules, Dividends and Capital Gains Tax Rates.$)$

Answer is complete but not entirely correct. Calculate the total capital gains and losses:

Short$-$term capital losses: $$39,800$

Long $-$ term capital gains $=$A preferred stock $+C$ common stock $+V$ mutual fund

$=72,400+10,100+900$

$=83,400$

Apply capital loss carryovers:

Short$-$term capital loss carryover from prior years: $$2,300$

Long$-$term capital loss carryover from prior years: $$4,800$

Net short $-$ term capital loss $=$ Short $-$ term capital losses $-$ Short $-$ term capital loss carryover from prior years

$=39,800-2,300$

$=37,500$

Net long $-$ term capital loss $=$ Long $-$ term capital gains $-$ Long $-$ term capital loss carryover from prior years

$=83,400-4,800$

$=78,600$

Calculate the taxable income:

Wage income: $$130,000$

Municipal bond interest: $$3,000$

Interest in corporate bonds: $$3,000$

Qualified dividends: $$4,000$

Net short$-$term capital loss deduction: $$3,000$

Net long$-$term capital loss deduction: $$3,000$

Total deductions $=$ Net short $-$ term capital loss deduction $+$ Net long $-$ term capital loss deduction

$=3,000+3,000$