Recognized Loss


DEFINITION of 'Recognized Loss'

When an investment or asset is sold for less than its purchase price. Recognized losses may be reported for income tax purposes and then carried over into future periods.

BREAKING DOWN 'Recognized Loss'

Recognized capital losses can be used for effective tax planning strategies. For example, if an investor has taxable capital gains for a given year of $10,500 and is able to recognize a loss on another investment for $2,500, this loss can be applied against the taxable capital gains. Therefore, this investor's net taxable capital gains for the year are $8,000 rather then $10,500.

  1. Recognized Gain

    When an investment or asset is sold for an amount that is greater ...
  2. Gain

    An increase in the value of an asset or property. A gain arises ...
  3. Capital Gain

    1. An increase in the value of a capital asset (investment or ...
  4. Deferred Income Tax

    A liability recorded on the balance sheet that results from income ...
  5. Exempt Income

    Certain types or amounts of income not subject to federal income ...
  6. Exemption

    A deduction allowed by law to reduce the amount of income that ...
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