Can I use long term loss to offset short term gains?

[frugalor]

I have a lot of long term paper loss, no short term loss. If I incur $100 short term capital gain, can I produce $100 long term loss to offset it?

[FiveK]

See line 16 on https://www.irs.gov/pub/irs-pdf/f1040sd.pdf. What conclusion do you draw?

[frugalor]

See line 16 on https://www.irs.gov/pub/irs-pdf/f1040sd.pdf. What conclusion do you draw?

Let's see. Line 16 says to combine net short term (line 7) and net long term (line 15)... So the answer to my question is yes, you can offset the short term gains with long term loss because the tax sheet combines them on line 16. Am I right?

[FiveK]

See line 16 on https://www.irs.gov/pub/irs-pdf/f1040sd.pdf. What conclusion do you draw?

Let's see. Line 16 says to combine net short term (line 7) and net long term (line 15)... So the answer to my question is yes, you can offset the short term gains with long term loss because the tax sheet combines them on line 16. Am I right?

That's how it looks from here.

[boomer_techie]

So the answer to my question is yes, you can offset the short term gains with long term loss because the tax sheet combines them on line 16.

The correct word is "must", not "can".

In your case, you are forced into a good situation: You are offsetting short term gain taxed at your (presumably higher) marginal regular rate with the long term loss that otherwise only reduces taxes at a 15% or 20% rate.

On the other hand, if you had a short term loss and a long term gain, then you'd be on the losing end of the stick. In that case, the loss, which could have offset a highly taxed gain, is forced to be used to offset a low tax gain.

Keep the above in mind. If you ever have a short term loss, avoid realizing a long term gain until you also realize a short term gain that covers the loss.

[Makefile]

Note that if you receive a short-term capital gain distribution from an active fund, it's oddly considered a non-qualified dividend and isn't broken out separately as a capital gain on 1099-DIV (i.e., all capital gain distributions are long-term). So it's an unfortunate exception that tax loss harvesting can't offset.

[Nohbdy]

[quote of deleted comments removed by admin Alex. I'm leaving the following because it is useful even without the context]

Also, offering tax advice can be really sensitive when we don’t know the whole situation. Pointing at the tools to figure it out is teaching OP to fish for themselves.

[Raymond]

See line 16 on https://www.irs.gov/pub/irs-pdf/f1040sd.pdf. What conclusion do you draw?

I learned something new today, so thank you for posting the link