What is the net capital gain or loss on Ken's security sales?

To determine the net capital gain or loss from Ken's security sales, it's essential to understand how long-term and short-term capital gains and losses are treated for tax purposes. Capital assets held for one year or less are considered short-term, while those held for longer than a year are considered long-term.

In this scenario, the correct answer indicates a net long-term loss of $1,000 along with a net short-term loss of $2,200. This means that Ken experienced losses in both categories of securities he sold.

The total losses from both short-term and long-term transactions are significant for tax reporting and can be utilized to offset other income up to a certain limit. The long-term loss of $1,000 reduces Ken's taxable income, and the short-term loss of $2,200, which typically has a higher tax implication since short-term gains are taxed as ordinary income, also reduces taxable income.

This combination effectively shows that Ken's investment activities resulted in overall losses, and the specified amounts reflect the calculated capital losses. By accurately identifying these categories and amounts, Ken can strategically plan for his tax obligations and possibly carry over losses to future tax years if needed.

Analyzing the other options, they do not correctly reflect the totals