Message Font: Serif | Sans-Serif
No. of Recommendations: 0
This year I have a net Long-term Capital Gain of $6483 for which I would owe $1296.60 in taxes (20%). I am planning on selling a stock which would give me a net Short-term Capital Loss of $861.

My question is this:

Would I then use the $861 dollar for dollar to offset the $6483 gain - thus reducing my Long-term Capital Gain to $5622 upon which I would owe $1124.4 in taxes (20%)?


Is the $861 used to offset the $1296.60 in taxes that I owe on the $6483 Long-term Capital Gain - thus reducing my tax bill to $435.60?

I assume that the first scenario is what I have to do... but it seems like I'm "wasting" the short-term loss by offsetting the long-term gain which is only taxed at 20% Perhaps I would be better off cashing in some stocks I own that have had big short-term runups... so I could use the short-term loss to offset the short-term gains which are taxed as ordinary income.

Sorry for the naive question, but this is my first year where I've had to pay any capital gains taxes. I think they should do away with them entirely!
Print the post  


In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.