Question

For 2018, Sherri has a short-term loss of $2,890 and a long-term loss of $6,300. a. How much loss can Sherri deduct in 2018?

Answer 1

Sherri has a $2,890 short-term capital loss and a $6,300 long-term capital loss. Because both are losses and they cannot be netted. Individual taxpayers can offset $3,000 of capital loss against ordinary income, and even the short-term losses are being offset first in the year 2018.

Sherri can carryover the losses to 2019 is also considerd as follows:

Sherri as individual taxpayers can offset $3,000 of capital loss against ordinary income, with short-term losses being offset first. Therefore, Sherri can deduct the $2,890 short-term capital loss and $110 of the long-term capital loss in 2018. The remaining $6,190 of the long-term capital loss (i.e. $6,300 less the $110) is carried forward indefinitely.