Chapter 11. Investments . Investments Overview. Before-tax rate of return on investment After-tax rate of return on investment Depends on when investment income is taxed Relates to timing tax planning strategy Depends on the rate at which the income is taxed
Step 1: Combine all short-term capital gains and losses for the year and any short-term capital loss carryforward. If negative, a net short-term capital loss or if positive a net short-term capital gain.
Step 2: Combine all long-term capital gains and losses for the year and any long-term capital loss carryforward. If negative, a net long-term capital loss or if positive a net long-term capital gain.
Step 3: If the results from steps 1 and 2 are both positive or negative, stop the netting process. Otherwise, net the results from steps 1 and 2.
If additional netting is required in Step 3, four outcomes are possible:
What is the amount and character of
Ferdinand’s gains and/or losses for the year?