AI
Saturday, January 04, 2003 6:22:52 PM
Babylon--- CORRECTION on Capital Loss Dededuction-
After I wrote my reply to you, I double checked the tax rules and here's what I came up with:
The netting and taxing rules are:
(1) Combine long-term gains and long-term losses to get net long-term gain (loss).
(2) Combine short-term gains and short-term losses to get net short-term gain (loss).
(3) Combine net long-term gain (loss) and net short-term gain (loss) to get net capital gain (loss).
(4) If there is both a net capital gain and a net long-term capital gain, the smaller amount of the two gets the special long-term gain tax treatment. The remainder of net gain over net long-term gain (if any) is taxed as ordinary income.
(5) If there is a net capital loss, it can be taken against ordinary income in the current year, with a limit of $3,000. You first use net short-term loss (if any) against ordinary income. If the net capital loss exceeds $3,000, it is carried over to the following year. The short-term and long-term components of the loss are separately carried over. So, if you have a $4000 net ST loss and a $2000 net LT loss, you'll take $3000 of the ST loss against ordinary income and carry over a ST loss of $1000 and an LT loss of $2000. If you have a $2000 net ST loss and a $4000 net LT loss, you'd take $2000 of ST loss and $1000 of LT loss against income and carry over $3000 of LT loss.
SORRY- the rules I gave you for short term gains and losses
ves income $1/$1 for short term losses and $2/1 on long term losses were old rules, no longer used. All I can say is the it was late when I replied
. Sorry for an confusion.
Rob
After I wrote my reply to you, I double checked the tax rules and here's what I came up with:
The netting and taxing rules are:
(1) Combine long-term gains and long-term losses to get net long-term gain (loss).
(2) Combine short-term gains and short-term losses to get net short-term gain (loss).
(3) Combine net long-term gain (loss) and net short-term gain (loss) to get net capital gain (loss).
(4) If there is both a net capital gain and a net long-term capital gain, the smaller amount of the two gets the special long-term gain tax treatment. The remainder of net gain over net long-term gain (if any) is taxed as ordinary income.
(5) If there is a net capital loss, it can be taken against ordinary income in the current year, with a limit of $3,000. You first use net short-term loss (if any) against ordinary income. If the net capital loss exceeds $3,000, it is carried over to the following year. The short-term and long-term components of the loss are separately carried over. So, if you have a $4000 net ST loss and a $2000 net LT loss, you'll take $3000 of the ST loss against ordinary income and carry over a ST loss of $1000 and an LT loss of $2000. If you have a $2000 net ST loss and a $4000 net LT loss, you'd take $2000 of ST loss and $1000 of LT loss against income and carry over $3000 of LT loss.
SORRY- the rules I gave you for short term gains and losses
ves income $1/$1 for short term losses and $2/1 on long term losses were old rules, no longer used. All I can say is the it was late when I replied
. Sorry for an confusion. Rob
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