The Good News and Bad News About Capital Losses

Discussing capital losses with clients isn’t usually much fun, because it involves the loss of money. The good news is that when we sell a position with a capital loss, it creates a taxable loss. And capital losses can be used to offset capital gains. If a taxpayer has taxable losses in excess of their capital gains, then they can deduct up to $3,000 of those capital losses against their ordinary income.