During 2021, Gorilla Corporation, a calendar year C corporation, has net short-term capital gains of $15,000, net long-term capital losses of $105,000, and taxable income from other sources of $460,000. Prior years’ transactions included the following:

a. How are the capital gains and losses treated on Gorilla’s 2021 tax return?

b. Determine the amount of the 2021 capital loss that is carried back to each of the previous years.

c. Compute the amount of capital loss carryforward, if any, and indicate the years to which the loss may be carried.

d. If Gorilla is a sole proprietorship rather than a corporation, how would these transactions be reported in the proprietor’s 2021 tax return?

e. Assume that Gorilla Corporation’s capital loss carryforward in part (c) is $27,000 and that Gorilla will be able to use $11,000 of the carryover to offset capital gains in 2022 and the remaining $16,000 to offset capital gains in 2023. In present value terms, determine the tax savings of the $105,000 long-term capital loss recognized in 2021. Assume a discount rate of 5%. Further, assume that Gorilla Corporation’s marginal income tax rate is 34% for all tax years prior to 2018. Create a spreadsheet using Microsoft Excel (or a similar software program) that summarizes your analysis.

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2017 net short-term capital gains 2018 net long-term capital gains 2019 net short-term capital gains 2020 net long-term capital gains $40,000 18,000 25,000 20,000