Capital Loss
Loss from selling an asset for less than its purchase price.
A capital loss occurs when a capital asset is sold for less than its cost basis. Capital losses can offset capital gains dollar-for-dollar, and up to $3,000 of net capital losses can be deducted against ordinary income per year. Unused losses carry forward to future tax years indefinitely.
Example
An investor sells stock purchased for $15,000 at $9,000, realizing a $6,000 capital loss that offsets other gains and reduces taxable income by up to $3,000 this year.
Why It Matters for Your Business
Capital losses are a valuable tax tool that can offset gains and reduce ordinary income, so tracking cost basis carefully pays off at tax time.
Related Terms
More Taxes Terms
Adjusted Gross Income
Gross income minus specific deductions like retirement contributions.
Tax Audit
An examination of tax returns by the IRS to verify accuracy.
Capital Gains
Profit from selling an asset for more than its purchase price.
Tax Deduction
An expense that reduces taxable income.
Estimated Taxes
Quarterly tax payments made by self-employed individuals and businesses.
Related Financial Guides & Resources
Automate Your Finances with AI
FiscalInsights uses AI to automate bookkeeping, track expenses, and forecast cash flow — so you can focus on your business.
Start Free Trial