Choice "C" is correct. In Year 9, Marsha and Brad had a net capital loss of $17,000, of which an additional $3,000 can be used to offset income from other sources (for example, the ordinary income from employment) in the current year. This would reduce the carryforward to $14,000.
Choice "b" is incorrect. Taxpayers are limited to a maximum capital loss of $3,000 offsetting income from other sources (after offsetting any appropriate capital gains). Therefore, the net total $17,000 loss on the sale of the stock cannot be used in the year it is incurred.
Choice "a" is incorrect. Capital losses can offset any gains in the year incurred, and then a maximum of $3,000 of income from other sources can be offset with capital losses.
Choice "d" is incorrect. Choice "d" is the net of the current year loss and gain; however, an additional $3,000 of the loss can be recognized in the current year.