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Section 183(b)(2) provides that a taxpayer may deduct an amount "equal to the amount of the deductions which would be allowable [ . . . ] only if such activity were engaged in for profit, but only to the extent that the gross income derived from such activity for the taxable year exceeds the deductions allowable [ . . .
Even if you can’t claim the maximum $3,000 net loss, you can still reduce the value of your gains and save on taxes that way. So if you have a $4,000 gain and a $1,000 loss, you’d have net ...
IRS rules can help reduce the sting of capital gains tax, as they allow investors to offset capital gains with capital losses. For example, if you have a stock trading at a $5,000 loss and you ...
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So, if you’re in the 24% tax bracket for income, that same rate would apply to any short-term capital gains you report on your tax return. The long-term capital gains tax rate is 0%, 15% or 20%.
If marginal rates are different, then there can be additional tax savings (e.g., deducting excess losses against a higher ordinary income rate in one year in exchange for additional long term capital gains tax at a lower rate in a later year) or even a tax penalty (e.g., deducting at a lower capital gains tax rate in several years in exchange ...
So you may consider taking a loss sooner than you might otherwise, in order to minimize your taxes. Or you might try to use low-tax long-term gains to offset more highly taxed short-term gains ...
And now it's tax time and you're ready to reduce your taxes by taking a whole bunch of deductions for this "business." Stop right there. You might not be.
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