Скачать или смотреть Pivotal Solutions Management's ABCs of Investing Series: What is Capital Loss - Part 2

🌟 RECAP/SUMMARY OF WHAT CAPITAL LOSS IS – PART 2 🌟

Capital loss 📉 is when …

A person experiences a decline in the value of their asset 😢. (a, b)

An asset goes down ⬇ in value. (a, b)

Capital loss can occur when …

A person sells an asset for a lower amount than the purchase price of the asset. (b).

The uniqueness of capital loss is that it may …

✅ Help to offset taxes owed on capital gains. (c)

✅ Lower taxable income. (b, c, d)

✅ Put you in a position to receive a tax deduction. (c, d)

Steps to reap possible benefits from a capital loss include …

1️⃣ Determine whether the capital loss is a realized or unrealized loss.

✅ A realized loss occurs when you sell an asset at a lower price than the asset’s purchase price. (b, c)

✅ An unrealized loss occurs when your asset’s value drops at a price lower than the asset’s purchase price. BUT you DON’T SELL the asset. (d)

To move forward to Step 2, the capital loss MUST be a REALIZED LOSS.

2️⃣ Determine whether the realized capital loss is a long-term or short-term loss.

✅ Long-term loss is when a person holds an asset for MORE THAN ONE YEAR and realizes a capital loss when selling the asset. (c, e)

✅ Short-term loss is when a person holds an asset for ONE YEAR OR LESS and realizes a capital loss when selling the asset. (c, e)

Capital Loss Formula:

Asset’s Total Selling Price – Asset’s Total Purchase Price = Asset Having or Not Having a Capital Loss

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References

(a) Chen, J. (2023, April 30). Capital gains: Definition, rules, taxes, and asset types. Investopedia. Retrieved from https://www.investopedia.com/terms/c/...

(b) Chen, J. (2021, January 30). Capital loss definition and reporting requirements. Investopedia. Retrieved from https://www.investopedia.com/terms/c/...

(c) Wu, J. (2023, May 31). What is a capital loss? Moneywise. Retrieved from https://moneywise.com/taxes/what-is-c...

(d) Perez, L. (2023, January 6). What you need to know about the capital loss tax deduction. SmartAsset. Retrieved from https://smartasset.com/taxes/capital-...

(e) Cussen, M.P. (2023, February 24). Capital losses and taxes. Investopedia. Retrieved from https://www.investopedia.com/articles...

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