Clarification of Long/Short Term Capital gains and Loss Deduction

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EricGold
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Clarification of Long/Short Term Capital gains and Loss Deduction

Post by EricGold »

Hi Folks,

I understand the general idea of capital gains (CG) having different tax rates for short and long term gains, but I'm unclear how a CG loss deduction is handled. Is it taken off LT or ST losses ?
Last edited by EricGold on Wed May 15, 2024 6:29 am, edited 1 time in total.
jebmke
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Re: Clarification of Long/Short Term Capital gains and Loss Deduction

Post by jebmke »

Both. LT losses applied to LT gains and ST losses applied to ST Gains.

Check out Schedule D. Easy to follow the arithmetic on this schedule.
When you discover that you are riding a dead horse, the best strategy is to dismount.
Topic Author
EricGold
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Re: Clarification of Long/Short Term Capital gains and Loss Deduction

Post by EricGold »

I'm asking about the deduction, not the offsetting of losses and gains
jebmke
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Re: Clarification of Long/Short Term Capital gains and Loss Deduction

Post by jebmke »

EricGold wrote: Wed May 15, 2024 7:36 am I'm asking about the deduction, not the offsetting of losses and gains
I don't know what deduction you are talking about. If you have a total net loss (Gains-losses is negative), up to $3,000 is reported as a loss ((negative income) on the 1040.
When you discover that you are riding a dead horse, the best strategy is to dismount.
Topic Author
EricGold
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Re: Clarification of Long/Short Term Capital gains and Loss Deduction

Post by EricGold »

jebmke wrote: Wed May 15, 2024 7:40 am If you have a total net loss (Gains-losses is negative), up to $3,000 is reported as a loss ((negative income) on the 1040.
Exactly this. Does the $3,000 come off LT or ST carry-over ?
avalpert1
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Re: Clarification of Long/Short Term Capital gains and Loss Deduction

Post by avalpert1 »

EricGold wrote: Wed May 15, 2024 8:44 am
jebmke wrote: Wed May 15, 2024 7:40 am If you have a total net loss (Gains-losses is negative), up to $3,000 is reported as a loss ((negative income) on the 1040.
Exactly this. Does the $3,000 come off LT or ST carry-over ?
It comes from short term losses first then long term losses
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EricGold
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Re: Clarification of Long/Short Term Capital gains and Loss Deduction

Post by EricGold »

^^ Thank you
jebmke
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Re: Clarification of Long/Short Term Capital gains and Loss Deduction

Post by jebmke »

There is a brief exhibit in the Schedule D instructions that shows how it works.
When you discover that you are riding a dead horse, the best strategy is to dismount.
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EricGold
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Re: Clarification of Long/Short Term Capital gains and Loss Deduction

Post by EricGold »

jebmke wrote: Wed May 15, 2024 3:42 pm There is a brief exhibit in the Schedule D instructions that shows how it works.
Me being a lazy sod, I skimmed all 16 pages and could not find it. A search for "3,000' came up empty, as did "exhibit"

Arghh
jebmke
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Re: Clarification of Long/Short Term Capital gains and Loss Deduction

Post by jebmke »

EricGold wrote: Wed May 15, 2024 5:17 pm
jebmke wrote: Wed May 15, 2024 3:42 pm There is a brief exhibit in the Schedule D instructions that shows how it works.
Me being a lazy sod, I skimmed all 16 pages and could not find it. A search for "3,000' came up empty, as did "exhibit"

Arghh
Upon further review, the schedule I was looking at is how to arrive at the carryover for 2023 if all you have is the 2022 return. Carry on.
When you discover that you are riding a dead horse, the best strategy is to dismount.
secondcor521
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Re: Clarification of Long/Short Term Capital gains and Loss Deduction

Post by secondcor521 »

EricGold wrote: Wed May 15, 2024 5:17 pm
jebmke wrote: Wed May 15, 2024 3:42 pm There is a brief exhibit in the Schedule D instructions that shows how it works.
Me being a lazy sod, I skimmed all 16 pages and could not find it. A search for "3,000' came up empty, as did "exhibit"

Arghh
Not an exhibit, but the carryover worksheet where this stuff is handled is at the following link:

https://www.irs.gov/instructions/i1040s ... 331id0e493
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EricGold
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Re: Clarification of Long/Short Term Capital gains and Loss Deduction

Post by EricGold »

jebmke wrote: Wed May 15, 2024 5:24 pm
EricGold wrote: Wed May 15, 2024 5:17 pm
jebmke wrote: Wed May 15, 2024 3:42 pm There is a brief exhibit in the Schedule D instructions that shows how it works.
Me being a lazy sod, I skimmed all 16 pages and could not find it. A search for "3,000' came up empty, as did "exhibit"

Arghh
Upon further review, the schedule I was looking at is how to arrive at the carryover for 2023 if all you have is the 2022 return. Carry on.
No worries, thanks for looking
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