Registered Tax Return Preparer RTRP Practice Exam

Question: 1 / 400

What is the maximum amount of capital loss carryover that can be held onto until used up?

$3000

The maximum amount of capital loss that can be deducted in a given tax year is $3,000 for individuals, and this amount can be carried forward to future tax years if it exceeds the capital gains for that year. If a taxpayer has a net capital loss greater than $3,000, they can carry the excess amount into the next tax year until it is fully utilized. This limit applies to the annual deduction allowed and is established by tax regulations to assist taxpayers in offsetting their taxable income with capital losses efficiently.

The other options suggest higher amounts for the capital loss deduction, which are not aligned with the IRS rules concerning capital losses for individuals, affirming that the $3,000 limit is the correct approach in this context.

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$5000

$7500

$8000

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