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Strategies & Market Trends : Stock Attack -- A Complete Analysis
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To: Chris who wrote (39313)12/26/2000 2:04:53 PM
From: adcpres  Read Replies (1) of 42787
 
Chris:

(correct me if i am wrong):

long term gains can only be deducted with long term loss --- CORRECT GH

short term gains can only be deducted with short term loss. --- CORRECT GH

but short term losses can deduct ordinary income. -- not quite the whole story. See below

(this is why im not a CPA) -ggg-


The net LONG and SHORT term GAINS or LOSSES get combined in part 3 of schedule D and transferred over to form 1040 to combine with ordinary income. However, here's the gotcha. ALL of any NET gain from schedule D gets taxed as ordinary income BUT you can only deduct up to $3000 of any NET losses in a given year. You can use the excess losses to offset gains in subsequent years but if you still have a NET LOSS you are still limited to a $3000 deduction in any given year. Get yourself publication 550. It makes for good reading. Make sure you have a bottle of whiskey handy while trying to decipher the tax rules. It has taken me years. LOL
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