Capital Loss
Capital Loss means:
the loss from the sale of a capital asset. Individuals are limited to $3,000 of loss that can be used annually to offset ordinary income; corporations may offset capital losses against capital gains but not against ordinary income. An individual may carry a capital loss forward until it is completely exhausted. A corporation may carry a capital loss back 3 years and forward 5 years. Former IRC (check if this IRC provision is current here) §§1212(a) and (b), 1222(10).
Example of Capital Loss:
Learn more about tax examples, explanations and calculations here.
Collins, an investor, purchases land for $10,000. Two years later she sells it for $8,000. The $2,000 difference is a capital loss, since the land is a capital asset.
In other words: The loss from the sale of assets such as stocks, bonds, mutual funds and real estate. Such losses are first used to offset capital gains and then up to $3,000 of excess losses can be deducted against other income, such as his or her salary. Long- and short-term losses (distinguished by whether the property was held for more than one year or a shorter period of time) are first used to offset gains of a similar nature. Any excess first offsets the other kind of gain, then up to $3,000 of net loss can be deducted against other other types of income each year.
U.S. and other Developed Countries International Tax Meaning
The loss from the sale of a capital asset.
See also Capital Gain in the American Legal Encyclopedia and Capital Gain in the World Legal Encyclopedia.
Description and Definition of Capital Loss
The loss from the sale of a capital asset such as stocks, bonds, mutual funds and real estate. The difference between amount realized and adjusted basis on the sale or exchange of capital assets. Capital losses are deducted first against capital gains, and then against up to $3,000 of other income.
Description and Definition of Long-Term Capital Gain or Loss
Your profit or loss from the sale of a capital asset that you held for more than 1 year.
Resources
See Also
Further Reading
- Long-Term Capital Gain or Loss in the West's Tax Law Dictionary
- Long-Term Capital Gain or Loss in “A Dictionary of Taxation”
Leave a Reply