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This subject may well have been dealt with previously, but I can't find the answer so here goes.

For an active trader it doesn't take to many months to conceivably reach the $3000 limit. You may be up overall by $10,000, but lots of small losses can add up.

For instance, let's say you've lost a total of $3000 and gained $3000. Right now you're breaking even on the year. Net $0.00. Now you make a trade and lose another $500, then you make yet another trade and gain $500. Now you've lost $3500 on the year, but are still breaking even on the year. Net still $0.00. At this point do you owe taxes (short term capital gains) on that last $500 gain, even though you're net is $0.00?
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