If you had a $1000 Capital loss from previous years,and a $2000...

If you had a $1000 Capital loss from previous years,
and a $2000 Capital gain from this year (with entitlement to 50% discount)

Option A would mean that this year's gain would first be reduced to $1000 (50% discount) then reduced to zero after applying previous years' loss.

Option B would mean this year's gain would first be reduced to $1000 (previous loss offset) then reduced to $500 after applying CGT discount.

It should be Option A, logically and morally.