With regard to the treatment of capital losses by a corporation other than an S corporation, which of the following statements is false? A) When figuring a current-year net capital... With regard to the treatment of capital losses by a corporation other than an S corporation, which of the following statements is false? A) When figuring a current-year net capital loss, you must include any capital loss carried from another year. B) A corporation may not carry a capital loss from, or to, a year during which it is an S corporation. C) If a corporation has a net capital loss, it cannot deduct the loss in the current year. D) When a corporation carries a long-term net capital loss to another year, it is treated as a short-term loss.
Understand the Problem
The question asks to identify the false statement regarding the treatment of capital losses by a corporation (excluding S corporations). This involves understanding how corporations handle net capital losses, carryovers, and interactions with S corporation status.
Answer
Statement A is false.
The false statement is A: When figuring a current-year net capital loss, you must include any capital loss carried from another year.
Answer for screen readers
The false statement is A: When figuring a current-year net capital loss, you must include any capital loss carried from another year.
More Information
A corporation's capital losses are only deductible to the extent of its capital gains. Net capital losses cannot be deducted in the current year but can be carried back 3 years and forward 5 years. When carried back or forward, they are treated as short-term capital losses.
Tips
It is important to understand the specific rules for corporations, which differ from those for individual taxpayers.
Sources
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