A client, a domestic C corporation, incurred a net capital loss of $50,000 in 2023. In 2021, the corporation had a net capital gain of $10,000, and in 2022, it had a net capital gain of $5,000. For the current year (2023), the corporation has a net capital gain of $2,000. How much of the 2023 net capital loss can be carried back, and how much is available for carryforward after applying the carryback rules?

Correct answer: C. $15,000 carried back; $35,000 carried forward.

C corporations carry back net capital losses three years and then carry forward five years. The loss is applied against capital gains in the carryback years. The 2023 $50,000 capital loss is carried back first to 2020 (no gain), then 2021 ($10,000 gain), then 2022 ($5,000 gain). Total carried back is $10,000 + $5,000 = $15,000. The remaining loss of $50,000 - $15,000 = $35,000 is carried forward. The current year (2023) capital gain of $2,000 is not relevant for the carryback of the *2023 net capital loss* itself, but rather for future carryforwards if the loss were generated in an earlier year.