Short-Term Capital Loss

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Short-Term Capital Loss

The loss one realizes by closing a position one has held for less than one year. For example, if one buys a stock or bond and sells it five months later for less than what one paid, the loss is considered a short-term capital loss. One may write off short-term capital losses against any capital gains.
References in periodicals archive ?
Similar to annuity trusts, unitrusts reported unusually large net short-term capital losses for 2001.
Example 3: The facts are the same in Example 1, except that the trading activity produced $200,000 of short-term capital losses instead of gains.
Individual taxpayers may deduct two different types of bad debts: business bad debts, which are deductible as ordinary losses if completely or partially worthless, and nonbusiness bad debts, which are short-term capital losses taken only when entirely worthless.
Excess short-term capital losses also may offset up to $3,000 of regular income per year.
The Tax Court held that the doctor was an investor, not a professional money lender; thus, the losses were nonbusiness bad debts and short-term capital losses.
Furthermore, up to $3,000 ($1,500 if married filing separately) of excess long or short-term capital losses can be used to offset ordinary income from such sources as your job or bank interest.