Trendy Corporation has a net short-term capital loss of $9,000 and a net longterm capital loss of $14,000 in year 5.Trendy Corporation can

a. deduct $3,000 of the short-term capital loss from its ordinary income and carry the remaining losses back to year 2.

b. deduct $3,000 of the long-term capital loss from its ordinary income and carry the remaining losses forward indefinitely.

c. deduct all $23,000 of the capital losses from its ordinary income.

d. deduct none of the capital losses.The corporation must carry back the entire net capital loss as a short-term capital loss to year 2.

AppendixLO1