Problem 7-37 (a) (LO. 3, 5)

Through a "Type B" reorganization, Golden Corporation acquired 80% of DragonCo stock by September 25 of the current tax year ending December 31. At the time the 80% was acquired, DragonCo was worth $900,000, and the Federal long-term tax-exempt rate was 3%. DragonCo holds capital loss carryovers of $40,000. Golden reports taxable income of $200,000 which includes $10,000 capital gains. DragonCo reports reports taxable income of $200,000 which includes $1,000 capital gains.

If an amount is zero, enter "0".

Enter the correct amount for each the following:

• How much of the DragonCo capital loss carryover may Golden use in the current year to offset its income? $0
• How much of DragonCo capital loss carryover may DragonCo use in the current year to offset its income? $