Sampson has three capital transactions during the current year:

Short-term capital loss of $5,000

Short-term capital gain of $3,000

Long-term capital loss of $2,000

What is the net effect on Sampsons income taxes if he is in the 35% income tax bracket?

a. $1,400 tax reduction.

b. $1,050 tax reduction.

c. $850 tax reduction.

d. $450 tax reduction.