Capital Losses

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  • can be either short-term (for assets held less than one year) or long-term (assets held longer than one year)
  • each year, you add up all your short term capital losses and deduct them from your short term capital gains
    • then you do the same for long term
    • if the end result is positive LTCG and positive STCG the LTCG will be taxed at the max rate of 20% and the STCG will be taxed at ordinary income tax rates
    • if the end result is a net capital loss you can deduct up to $3k of it from your ordinary income
    • the remainder of the capital loss can be carried forward to deduct in future years till it is used up

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  • 3 months ago by vince