Alonzo has $40,000 of ordinary income, a net short-term capital loss of $8,000, and a net long-term capital gain of $3,500. How will this be reported on Alonzo's tax return?

Group of answer choices

capital gain of $3,500 is reported and taxed at the capital gains rate; losses of $8,000 are carried forward

an offset to income of $4,500

an offset to ordinary income of $3,000 and a long-term carryforward of $8,000

an offset to ordinary income of $3,000 and a loss carryforward of $1,500