Capital Gains and Losses
Chapters in this video
- 0:00 Meet Carla and the two IRS questions
- 1:27 One-year line: short-term vs long-term rates
- 2:27 The 15% default and the holding-period clock
- 3:42 Calculating gains, losses, and the $3,000 rule
- 4:58 The net-vs-gross loss exam trap
- 5:34 Indefinite carryforward of unused losses
- 6:08 Rapid-fire exam recap
What this video covers
- The one-year dividing line between short-term and long-term capital gains, and why "more than one year" means 366 days minimum
- When the holding period clock actually starts (trade date plus one) and when it ends (the day of sale, inclusive)
- The default 15% long-term capital gains rate to assume when the Internal Revenue Service (IRS) question gives no tax bracket
- How to calculate a capital gain or loss using sale proceeds and adjusted cost basis
- The order of operations: losses offset gains dollar for dollar with no limit, then up to $3,000 of net losses deduct against ordinary income ($1,500 if married filing separately)
- Why the $3,000 cap applies to NET losses, not gross losses, and the classic exam trap built around that distinction
- Why unused capital losses carry forward indefinitely and never expire, no matter what the answer choices claim
Read the full lesson, free
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