Definition: Loss on the sale of an investment asset, such as stocks, bonds, or mutual funds. A loss is incurred if you sell the investmest for less than what you paid for it.
Capital Loss Limitations
If your total capital losses exceed your total capital gains for the whole year, then you have a net capital loss. Net capital losses are deductible up to a limit of $3,000 per year. Net capital losses in excess of the $3,000 limit are carried forward to next year's taxes.
Wash Sale Rules
The capital loss on a single investment transaction may be disallowed under the Wash Sale Rules.If you buy the same stock within one month of selling that stock for a loss, your loss will be disallowed under the Wash Sale Rule. The loss is not gone forever, however. The disallowed is added to your cost basis in the new stock position.
Capital Losses for Deceased Taxpayers
Net capital losses expire in the the year that a taxpayer dies. Neither the taxpayer's estate nor the taxpayer's spouse can claim a capital loss carryover for investment assets held only in the name of the taxpayer.More information:
