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Tax Offset Rules
all tax laws with your accountant.
You have profits!
So, how do you handle the profits and the offsetting losses from
trading? If you donít have more profits than losses, you have not been
paying attention and should check out
The IRS is not
concerned about the type of investments that generated your gains or
losses. It does not matter if the gains and losses are generated by
stocks, bonds, options, futures or selling your comic book collection.
Here are the simple rules:
You must match each
type of carryover or carry-forward loss to offset the same type of
Short term losses
against short term gains.
Long term losses
against long tern gains.
After that, you can
use any left over losses to offset other categories of gains.
current long term gains.
short term gains.
remaining losses can be used to offset $3,000 of this yearís
It is important to
remember to repeat this process every year until you write off all of
Now that you
understand the basics of carry forward losses, let you accountant
handle the details. And while we are talking about accountants, be
sure that you have an accountant that fully understands trading rules
(very few do!) or get a referral to an accountant that has stock
traders as clients.