Babylon- typically you net short term gains against short term losses; then you do the same with long term gains and losses. After the you accomplish the above process, you would offset your 10k in net short term gains against the 20k in net long term losses and with the resulting 10k overage in long term losses you can offset ordinary income of $3000 on a $2/$1 basis ($3000 deduction costs you $6000 in longterm losses, leaving you with a carry forward of $4000 in longterm losses ). Say you had an overage of 10k short term losses after netting with long term gains, you would offset ordinary income on a $1/$1 basis...leaving you with a short term loss carry forward of $7000.
I used to know this stuff cold, but it's late and I invite any or all corrections. Hope it helps. Rob
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