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Tax Question

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    Tax Question

    So I am no more an least once it comes to the stock market

    Now with the year-end once again coming up....I think this time I am surely getting rid of the dogs...

    Now the question is....what is the max amount of captial loss that I can deduct from my taxable income....I think its somewhere between 2000-3000 but not sure, altough it can be carried over in subsequent years also...

    Hmmm... a tax question

    1. You can carry forward a capital loss indefinitely.

    2. You can off-set a capital loss against a capital gain.

    3. You can only off-set a capital loss against your normal income to a maximum of $3,000, and the amount exceeding that has to be carried forward to future years.


    Lets suppose, you have

    Capital loss of $50,000.
    Capital gain of $20,000.
    Normal income of $15,000.

    Your capital loss will first be adjusted against the Capital Gain. The remaining balance is $30,000. Now you can adjust $3,000 against income income of current year. You are now left with $27,000. This you can carry forward in future years, and each year you can adjust $3,000 against normal income.



      Thanks Pristine for the detailed reply.

      Capital gain for this year....whoa...who would that lucky person be

      I was'nt clear about this max amount you can deduct in one year...for sure I don't intened generating enough losses to carry them over the next years...its just for the short-term, why not save some taxes if I can clear up my portfolio a little bit....


        Oh yeah..and if anybody wants to follow this advice..beware of the wash-sale rule...

        A wash-sale rule is one that if you sell a stock at a loss you cannot buy a 'similar' stock within the next 30 days, otherwise you cannot declare the capital loss..

        Now the difinition of a 'similar' stock is mirky, if you buy in a different company of same sector you can make an argument that it is different but definitely not for the stock of the same company...