Determination of Net Long-Term and Short-Term Gains or Losses

What this video covers

• Why short-term and long-term transactions must be netted within their own categories before any cross-category netting happens
• The four-step IRS netting process for a year with mixed gains and losses
• Why two net gains (one short-term, one long-term) stay separate and are taxed at their own rates instead of combining
• The "character follows the larger amount, not the gain" rule when a net gain fights a net loss
• How short-term capital gains are taxed at ordinary income rates while long-term gains receive preferential rates
• How to work through a four-position multi-transaction scenario and arrive at the correct final character
• The $3,000 deductible loss limit and how the remainder carries forward when both categories net to losses