CFAI 2002 Morning exam question 2A

[wouldratherberiding]

How is the after tax return higher if both accounts are in loss positions, there are no gains to offset

 

[cpk123]

I believe you meant to say 2012 Q 2A.
You had losses in the past year. But now you have gains. So those losses can be used to offset the gains - and when that happens - you pay lower taxes - so your After Tax return is HIGHER - due to the offsetting nature of the loss.

 

[wouldratherberiding]

Yes, 2012, sorry. How do you know we have gains this year though?