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Capital Gains and Losses

9/19/2013

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Almost everything you own and use for personal purposes, pleasure or investment is a capital asset. The IRS says when you sell a capital asset, such as stocks, the difference between the amount you sell it for and your basis, which is usually what you paid for it, is a capital gain or a capital loss. While you must report all capital gains, you may deduct only your capital losses on investment property, not personal property.

A “paper loss”— a drop in an investment’s value below its purchase price — does not qualify for the deduction. The loss must be realized through the capital asset’s sale or exchange.

Capital gains and losses are classified as long-term or short-term, depending on how long you hold the property before you sell it. If you hold it more than one year, your capital gain or loss is long-term. If you hold it one year or less, your capital gain or loss is short-term. For more information on the tax rates, refer to IRS Publication 544, Sales and Other Dispositions of Assets.

If your capital losses exceed your capital gains, the excess is subtracted from other income on your tax return, up to an annual limit of $3,000 ($1,500 if you are married filing separately).

Capital gains and losses are reported on Schedule D, Capital Gains and Losses, and then transferred to line 13 of Form 1040. There is a worksheet in last year’s Instructions to Schedule D to figure a capital loss carryover to this year. This is usually a very complicated matter, so please contact us so that you may receive the professional advice you deserve.

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    About Jason

    Jason Gilbert is Managing Director of RGA Investment Advisors LLC.  He has over 10 years of experience in investment advisory, including portfolio construction, financial strategy, and advanced planning for high-net worth and institutional clients.  He maintains an extensive background in both forensic accounting and personal finance, and serves as a fiduciary and trusted partner to his long-standing clients.

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    The opinions expressed on this site are those solely of Jason Gilbert and do not necessarily represent those of RGA Investment Advisors LLC (“RGA”).  This website is for informational purposes only and does not constitute a complete description of the investment services or performance of RGA. Nothing on this website should be interpreted to state or imply that past results are an indication of future performance. A copy of RGAs ADV Part II and privacy policy is available upon request. This website is in no way a solicitation or an offer to sell securities or investment advisory services. 

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Copyright 2023 Jason M. Gilbert, CPA/PFS, CFF, CGMA

  • About Jason
  • Work with Jason
  • RGA Investment Advisors LLC
    • Investment Strategy
    • Comprehensive Financial Planning
    • GIPS Verified Performance
    • Portfolio Construction
    • Our Story
    • Team
  • Writing
    • Investment Commentary
    • Valuewalk link
  • Contact Jason