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I’m not a CPA or accountant. Investopedia has a few articles on the subject.

I think capital losses can completely cancel any capital gains - kind of obvious if you think about it - if you lose $10 on sales of stock A and gain $10 on sales of stock B you had not income from your activities.

In addition, you can apply $3,000 in losses to reduce ordinary income (not taxes directly) and carry the remainder to following years. So on sale of stock A you lost $5,000, on sale of stock B you gained $1,000. You can eliminate the gain, have $4,000 left, reduce your taxable income of $100,000 to $97,000 using $3,000 more of the loss, then have $1,000 left over for following years. In the next years I think you can use that loss to reduce gains then income in the same way.

Hope I’m right and that is clear.




Thanks for answering. That is clear, and it makes sense.




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