For 2015, Sherri has a short-t

Ans-1-a- Sherri has a $2,960 short-term capital loss and a$4,800 long-term capital loss. Because both are losses they cannotbe netted.Individual taxpayers can offset $3,000 of capital lossagainst ordinary income,with short-term losses being offsetfirst.

Ans-b- Individual taxpayers can offset $3,000 of capital lossagainst ordinary income, with short-term losses being offset first.Therefore Sherri can deduct the $2,960 short term capital loss and$40($3,000-$2,960)of the long-term capital loss in 2015. Theremaining $4,760 of the long-term capital loss ($4,800-$40 duductcurrently) is carried forward to 2016.

Ans-2-a- The Nielsons have $3,600 ($2,100+$1,500) ofmiscellaneous itemised deductions including investment expenses.These deduction are only deductible to the extent they exceed 2percent of AGI.if AGI is $85,000, 2 percent of AGI is $1,700 and$1,900 of the $3,600 is deductible. The deductible portion is firsttreated as investment expense and and then noninvestmentmiscellaneous itemized deductions. In this situation, all $1,500 ofthe investment expenses are deductible. The tax benefit of theinvestment expenses is $375 ($1,500*25/100 marginal tax rate.

Ans-2-b- If AGI is $116,000, 2% is $2,320. In this caseonly$1,280 ($3,600-$2,320) of miscellaneous itemized deductions aredeductible. Because the deductible portion is first considered tobe the investment expenses, all $1,280 of the deductiblemiscellaneous itemized deductions are considered to be investmentexpenses. The tax benefit from $1,280 deductible investment expenseis $ 320 ($1,280*25/100 marginal tax rate).