Short-Term Capital Loss

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 ?
Using this amount, the IRS allocated approximately $13.5 million of the consideration to the sale of the Block 2 shares, resulting in a realized short-term capital loss of $500,000.
If long-term gains are more than long-term losses, the difference between the two is a "net long-term capital gain." If the net long-term capital gain is more than the net short-term capital loss, then the taxpayer has a net capital gain.
If you are losing money on an equity holding, you can put it to good use by selling within a year to book short-term capital loss. Even if you are sure about a future recovery, you can do this every year as hedge against a possible loss.
On August 4, 1975, the taxpayer sold the March 1976 futures contracts at a short-term capital loss. On the same day, the taxpayer purchased the same number of silver futures contracts for May 1976 delivery.
"Unrecaptured IRC Section 1250 gain" means the excess, if any, of: (i) that amount of long-term capital gain (not otherwise treated as ordinary income) that would be treated as ordinary income if IRC Section 1250(b)(1) included all depreciation and the applicable percentage under IRC Section 1250(a) were 100%; over (ii) the excess, if any of (a) the sum of collectibles loss, net short-term capital loss and long-term capital loss carryovers, over (b) the sum of collectibles gain and IRC Section 1202 gain.
Indexed-based SMAs also provide ongoing tax management advantages, such as tax loss harvesting using a short-term capital loss to offset capital gains.
The excess of net long-term capital gain over net short-term capital loss (if any) is net capital gain.
* A nonbusiness debt of a noncorporate taxpayer that becomes worthless within the taxable year is treated as a loss from the sale or exchange of a capital asset held for not more than one year (i.e., a short-term capital loss).
The premium that was paid to acquire the option is treated as a short-term capital loss.
The maximum tax rate on net capital gain (i.e., net long-term capital gain reduced by any net short-term capital loss) has been reduced from 20% to 15% (and from 10% to 5% for taxpayers in the 10% and 15% tax rate brackets) for property sold or otherwise disposed of after May 5, 2003 [and installment sale payments received after that date].
Thus, pursuant to the IRS Restructuring and Reform Act of 1998 a net short-term capital loss (from capital transactions open for a year or less) reduces any 20% type of gain dollar for dollar (after offsetting 28% and 25% gains, which are rare).