Is there a limit on long term capital loss to offset interest income for tax deduction? Not asking about carryover Does 14000$ in Long term loss offset a14000$ in gains?

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November 24, 2024
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Is there a limit on long term capital loss to offset interest income for tax deduction? Not asking about carryover For example, Does 14000$ in Long term loss offset a14000$ in gains(Dividend and Interest income) for tax purposes for the same tax year? Or will 3000 be used to offset and will the remaining 11000 be carried over?

Best answer by VolvoGirl

No. The loss only is applied to captial gains, not interest and dividends. So after taking a 3,000 loss on your tax return you need to carryover the rest. Just enter your sales and Turbo Tax will calculate the loss and carryover. You need to sell something with a gain to use up the loss.

VolvoGirlAnswer

Employee

rjs

Employee

Interest and dividends are not gains. Capital gain is the profit from selling something for more than you paid for it.

RKT12Author

Thanks for the responses.
Do the returns on US Treasury bonds count as Capital gains?

Mike9241

Do the returns on US Treasury bonds count as Capital gains?

not the interest

and there is no way to give you a specific answer on USTBs. some have OID or accrued market discount that increase your tax basis. Also, the selling price needs to be greater than their tax basis. The best source of info is your broker

generally

OID - a bond is issued at a price lower than its redemption value. The OID accrues as interest and since not paid adds to the ax basis. However, OID is computed based on the original issue. The issuer does not track the activity in the secondary market. for a bond purchased in the secondary market. The amount on the 1099-OID needs to be adjusted if the purchase price is different than the issue price + accrued OID

MARKET DISCOUNT is the amount by which the bond's stated redemption price at maturity exceeds the taxpayer's basis in the bond immediately after acquisition in the secondary market. A taxpayer can choose to accrue the market discount and include it in the current year's interest income. otherwise, its ordinary income when disposed of up to the amount of market discount.

MARKET DISCOUNT AND OID. if a market discount bond also has OID. the market discount is the sum of the bond's original issue price and the total OID includable in the gross income of all holders before the taxpayer acquired the bond, reduced by the taxpayer's basis in the bond immediately after acquisition.