Houston Corporation (a “C” corporation), not a dealer in securities, realizes taxable income of $60,000 from the operation of its business. Additionally, in the same year, Houston realizes a long-term capital loss of $10,000 from the sale of marketable securities. If the corporation realizes no other capital gains or losses, what is the proper treatment for the $10,000 long-term capital loss on the tax return?

Group of answer choices

Use $3,000 of the loss to reduce taxable income and carry $7,000 of the long-term capital loss forward for five years.

Use $6,000 of the loss to reduce taxable income and carry $4,000 of the long-term capital loss forward for five years.

Use $10,000 of the long-term capital loss to reduce taxable income.

Carry the $10,000 loss back three years, then forward five years.