Reference no: EM132824933

Individual Lark's year 2 brokerage account statement listed the following capital gains and losses from the sale of stock investments:

Short-term capital gain      $6,000
Long-term capital gain      $14,000
Short-term capital loss      $4,000
Long-term capital loss       $8,000

Problem 1: In addition, two stock investments became worthless in year 2. Public Company X stock was purchased in December, year 1, for $5,000, and formal notification was received by Lark on July, year 2, that it was worthless. Private company Section 1244 stock was issued to Lark for $10,000 in January, 20X1, and was determined to be worthless in December, year 2. What is Lark's year 2 net capital gain or loss before any capital loss limitation?

A. $2,000 net capital loss

B. $3,000 net capital gain

C. $7,000 net capital loss

D. $8,000 net capital gain