The process for netting capital gains and losses on tax returns involves four scenarios: (1) If both net short-term and net long-term gains exist, both are taxed at their respective rates. (2) If both net short-term and net long-term losses exist, the losses are combined, up to $3,000 can be deducted against ordinary income, and the remainder is carried forward to future tax years. (3) If there is a net short-term gain and a net long-term loss, the long-term loss offsets the short-term gain; if the loss exceeds the gain, up to $3,000 can be deducted against ordinary income, otherwise the remaining gain is taxed at the ordinary income rate. (4) If there is a net short-term loss and a net long-term gain, the short-term loss offsets the long-term gain; if the loss exceeds the gain, up to $3,000 can be deducted against ordinary income, otherwise the remaining gain is taxed at long-term capital gain rates.

Authors

• Person: Not available Organization: Mercer Advisors
  Capital Gains and Tax Loss Harvesting Explained - Mercer Advisors

Sources

• Capital Gains and Tax Loss Harvesting Explained - Mercer Advisors www.merceradvisors.com Mercer Advisors via serper

Referenced by nodes (3)

• ordinary income concept
• long-term capital gains concept
• short-term capital gains concept