Recognition the net capital loss


Response to the following problem:

Paris Corporation holds a $100,000 unrealized net capital gain and a capital loss carryforward that will expire in the current year. Should Paris accelerate the recognition of this gain from next year to this year, assuming a net capital loss carryforward in each of the following amounts?

Paris is subject to a 14 percent cost of capital. Its marginal tax rate is 40 percent.

a. $40,000

b. $10,000

c. Repeat parts a and b, but assume that Paris is subject to a 6 percent cost of capital.

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Taxation: Recognition the net capital loss
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