Capital Gains and Losses
Chapters in this video
- 0:00 The two questions the IRS always asks
- 1:28 The one-year dividing line and the 366-day rule
- 3:09 Defaulting to 15% long-term and ordinary income short-term
- 3:39 Calculating gains and losses with adjusted cost basis
- 4:34 Net losses offset gains first, then the $3,000 limit
- 6:32 Rapid-fire exam recap
What this video covers
- Why the holding period begins the day after the trade date and why January 1st to January 1st is still short-term
- How short-term capital gains are taxed at ordinary income rates up to 37%, while long-term gains receive preferential 0%, 15%, or 20% rates
- Why you must always default to a 15% long-term capital gains rate on the Series 7 unless the question explicitly states otherwise
- How to calculate capital gains and losses using adjusted cost basis and sale proceeds
- Why capital losses offset capital gains dollar for dollar with no limit before any ordinary income deduction
- The $3,000 annual net capital loss deduction limit against ordinary income, and how it drops to $1,500 for married filing separately
- Why unused capital losses carry forward indefinitely and never expire
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