Any excess losses are carried forward every year until used up, with net short-term capital losses being used first before the net long-term capital losses
These groups represent slightly more than 5% (777,776) of the 2001 individual federal income tax returns filed with short- and long-term capital losses
(772,253 in the "zero" AGI class and 5,523 in the "over $10 million" AGI class).
Except as otherwise provided in the straddle regulations under IRC Section 1092(b)--which treats certain losses from a straddle as long-term capital losses
(see Q 1079)--or in IRC Section 1233 (gains and losses from short sales, special holding period rules), capital gain or loss from the sale, exchange, or termination of a securities futures contract to sell property (i.e., the short side of a futures contract) will be short-term capital gain or loss.
Thus, investors should sell stock with long-term capital losses
His short-term capital gains from all investments equal or exceed short-term capital losses, and his long-term capital gains from all investments equal or exceed long-term capital losses
. In addition, the capital gains tax change must alter the investor's expectation of the taxes that will be generated when he sells in the future, and inelasticities in the supply of capital must prevent immediate economic readjustment.
Example 2: The facts are the same as in Example 1, except that A had $100,000 in long-term capital losses
instead of gains from the investing activity.
In Exhibit 2, a net short-term capital loss is now combined with losses on collectibles and long-term capital losses
"carried" to be offset against collectibles gains and small business stock gains, rather than against net long-term capital gains.
Similarly, the $40,000 of long-term capital losses
would have been taken as incurred.