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Short term losses to offset short term gains

Posted: Thu Nov 14, 2019 11:44 am
by corn18
I have short term losses of $9,800 this year. I also have short term gains of $11,000. I googled this and from what I can tell, I can use all of the $9,800 loss to offset part of the $11,000 gain and will have a net $1,200 short term gain that will be taxable. Do I have this right? My cornfusion stems from the $3,000 limit, but from what I read, this applies to ordinary income.

Re: Short term losses to offset short term gains

Posted: Thu Nov 14, 2019 11:52 am
by HomeStretch
You are right.

If you had short term capital losses of $10,000 and short term gains of $6,000 (and no long term gains/losses), $6,000 of losses would offset the gains of $6,000, then $3,000 of the loss would offset ordinary income and the remaining loss of $1,000 would carry forward. I can’t recall if there is any carryback provision.

Re: Short term losses to offset short term gains

Posted: Thu Nov 14, 2019 12:05 pm
by kaneohe
https://www.irs.gov/pub/irs-pdf/f1040sd.pdf

check out sch D........in pt I, you net ST gains/losses against each other; in pt II, you net LT gains/losses;
in Pt III, you net ST against LT; then if you have a net loss, the 3K limitation comes into play on line 21.

Re: Short term losses to offset short term gains

Posted: Thu Nov 14, 2019 12:11 pm
by BL
Maybe you can find some long-term losses if you have something like specific id basis. They would off-set short-term gains after off-setting any long-term gains.

Re: Short term losses to offset short term gains

Posted: Thu Nov 14, 2019 12:15 pm
by Wiggums
kaneohe wrote:
Thu Nov 14, 2019 12:05 pm
https://www.irs.gov/pub/irs-pdf/f1040sd.pdf

check out sch D........in pt I, you net ST gains/losses against each other; in pt II, you net LT gains/losses;
in Pt III, you net ST against LT; then if you have a net loss, the 3K limitation comes into play on line 21.
+1.

Re: Short term losses to offset short term gains

Posted: Thu Nov 14, 2019 6:05 pm
by corn18
Awesome sauce! Thanks everyone, this helps for tax planning.

Re: Short term losses to offset short term gains

Posted: Thu Nov 14, 2019 7:59 pm
by rossington
corn18 wrote:
Thu Nov 14, 2019 6:05 pm
Awesome sauce! Thanks everyone, this helps for tax planning.
Why not offset the gains with the exact loss amount and let the remaining $1,200 ride until it qualifies as a long term gain? Or won't that work?

Re: Short term losses to offset short term gains

Posted: Thu Nov 14, 2019 9:39 pm
by lakpr
rossington wrote:
Thu Nov 14, 2019 7:59 pm
corn18 wrote:
Thu Nov 14, 2019 6:05 pm
Awesome sauce! Thanks everyone, this helps for tax planning.
Why not offset the gains with the exact loss amount and let the remaining $1,200 ride until it qualifies as a long term gain? Or won't that work?
Sounds like it is a done deal (gains and losses already realized), not a proposal

Re: Short term losses to offset short term gains

Posted: Thu Nov 14, 2019 9:41 pm
by corn18
lakpr wrote:
Thu Nov 14, 2019 9:39 pm
rossington wrote:
Thu Nov 14, 2019 7:59 pm
corn18 wrote:
Thu Nov 14, 2019 6:05 pm
Awesome sauce! Thanks everyone, this helps for tax planning.
Why not offset the gains with the exact loss amount and let the remaining $1,200 ride until it qualifies as a long term gain? Or won't that work?
Sounds like it is a done deal (gains and losses already realized), not a proposal
Affirmative.

Re: Short term losses to offset short term gains

Posted: Fri Nov 15, 2019 3:31 am
by rossington
corn18 wrote:
Thu Nov 14, 2019 9:41 pm
lakpr wrote:
Thu Nov 14, 2019 9:39 pm
rossington wrote:
Thu Nov 14, 2019 7:59 pm
corn18 wrote:
Thu Nov 14, 2019 6:05 pm
Awesome sauce! Thanks everyone, this helps for tax planning.
Why not offset the gains with the exact loss amount and let the remaining $1,200 ride until it qualifies as a long term gain? Or won't that work?
Sounds like it is a done deal (gains and losses already realized), not a proposal
Affirmative.
Understood.