Problem 3-40 (b) (LO. 1)

During 2018, Crown Corporation, a calendar year C corporation, has net short-term capital gains of $50,000, net long-term capital losses of $80,000, and taxable income from other sources of $270,000. Prior years' transactions included the following.

2014 net short-term capital gains	$12,000
2015 net long-term capital gains	10,000
2016 net short-term capital gains	9,500
2017 net long-term capital gains	7,000

If an amount is zero, enter "0".

a. How much is Crown's net capital loss for 2018? $

What is the amount of the capital loss deduction on Crown's 2018 tax return? $

Any excess net capital loss is carried back or forward as a short-term capital loss .

b. Of the excess 2018 net capital loss, how much is carried back to the previous years? $

c. Compute the amount of capital loss carryover to 2019 and future years. $

Indicate the years to which the loss may be carried. Select "Yes" or "No", which ever is appropriate.

2019	Yes
2020	Yes
2021	Yes
2022	Yes
2023	Yes

d. If Crown is a sole proprietorship, rather than a corporation, how would the owner report these transactions on the taxpayer's 2018 tax return?

Crown offsets $ of capital gains against capital losses and deducts an additional $ in capital losses . The remaining $ is carried forward indefinitely .

e. Assume that Crown Corporation's capital loss carryforward in part (c) is $3,500, and that Crown will be able to use $1,000 of the carryover to offset capital gains in 2019 and the remaining $2,500 to offset capital gains in 2020.

Assume the following:

A discount rate of 5%.

Present value factors - 1.000 for 2015-2018; 0.9524 for 2019 and 0.9070 for 2020.

Crown Corporation's marginal income tax rate is 34% for all tax years prior to 2018.

Round your computations to the nearest dollar.

In present value terms, determine the tax savings of the $80,000 long-term capital loss recognized in 2018. $