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Short-term gains are offset first by short-term losses. The net figures is taxed as ordinary income for Federal tax purposes at your marginal tax rate if it is a gain. If it is a loss, the loss is limited to $3,000 annually; if your loss is higher than $3,000, you can carry the loss forward to the next year with no limits on the number of years you can carryforward; in other words, you can carryforward until the loss is eliminated. The treatment by state varies.

Long-term gains are offset first by long-term losses. The net figure is taxed at a maximum rate of 15%. The treatment by state varies.

Where I live in DC, short-term/long-term gains are taxed as ordinary income; losses are deducted from income. In S.C., only 45 percent or some figure close to that is taxed for the gain; I can't remember how losses are treated.

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