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I'm new at this. Can you really net out your short term losses from your short term gains? In other words, if my short term gains for the year are $40,000 and my short term losses are $60,000, does that mean I can show a loss of $20,000 ...

Not only CAN you do this, you MUST. It's the way the law works. I can't think of a situation where this isn't the first thing you do with your short term gains and losses.

... using $3,000 this year and carrying the remainder over to future years?

Now we need more information. Your long-term gains and losses (and potentially some other items with special capital treatment) will affect what is used this year and what is carried over.

May I suggest a look at the article in the FAQ on netting gains and losses. The link is at the top of this page. I think you'll find it helpful in uderstanding the netting process.

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