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.

RELATED TERMS
  1. Long-Term Capital Gain Or Loss

    A gain or loss from a qualifying investment owned for longer ...
  2. Capital Loss Carryover

    The net amount of capital losses that aren't deductible for the ...
  3. Capital Gain

    1. An increase in the value of a capital asset (investment or ...
  4. Net Operating Loss - NOL

    A period in which a company's allowable tax deductions are greater ...
  5. Taxable Gain

    A profit on the sale of an asset that is subject to taxation. ...
  6. Realized Loss

    A loss is recognized when assets are sold for a price lower than ...
Related Articles
  1. Taxes

    Here's How to Deduct Your Stock Losses From Your Tax Bill

    Learn the proper procedure for deducting stock investing losses, and get some tips on how to strategically take losses to lower your income tax bill.
  2. Your Clients

    Here's the Best Way to Skirt Capital Gains Taxes

    Taxpayers who know the rules for netting gains/losses can generate additional losses to net against the taxable gains in their portfolios. Here's how.
  3. Investing

    Top Tips for Deducting Stock Losses

    Investors who know the rules can turn their losing picks into tax savings. Here's how to deduct your stock losses.
  4. Financial Advisors

    Using Tax-Loss Harvesting to Keep Your Gains

    Harvesting tax losses is a key skill that investors can use to keep more of their money in their pockets the next time they file taxes.
  5. Taxes

    What You Need To Know About Capital Gains And Taxes

    Find out how your profits are taxed and what to consider when making investment decisions.
  6. Investing Basics

    How to Deduct Your Stock Losses

    Held onto a stock for too long? Selling at a loss is never ideal, but it is possible to minimize the damage. Here's how.
  7. Taxes

    Ten Things That You Might Not Know Are Taxable

    When you file your taxes this year make sure that you have claimed all taxable income. Here are ten things that you might not know are taxable
  8. Taxes

    Minimize Taxes With Asset Location

    Learn how to maximize your investment returns with this tax-minimization strategy.
  9. Taxes

    Explaining Taxable Income

    Taxable income is the net of gross income and allowable deductions.
  10. Products and Investments

    How to Optimize Taxable Portfolios in Bear Markets

    A bear market presents an opportunity for financial advisors to optimize clients' taxable portfolios.
RELATED FAQS
  1. What are the advantages and disadvantages of capitalizing interest for tax purposes?

    Learn when a company is required to capitalize its interest payments. Understand the advantages and disadvantages of capitalizing ... Read Answer >>
  2. What are some examples of different taxable events?

    Learn what a taxable event is and how it affects investors and taxpayers with examples of taxable events that can result ... Read Answer >>
  3. Are my 2015 unrealized capital gains and dividends on mutual funds taxable income?

  4. Are capital gains taxed differently in different countries?

    Learn about capital gains taxes in the Unites States as well as those of other countries, where these tax rates vary significantly. Read Answer >>
  5. What assets are taxable and what assets are not taxable?

    Adjust your taxable income by understanding what assets the IRS taxes. Learn about legal strategies to lower tax liability ... Read Answer >>
  6. How do I avoid paying excess taxes on securities I have sold?

    If you dispose of securities during the tax year, the profit or losses from the transaction are either capital gains or losses. ... Read Answer >>
Hot Definitions
  1. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  2. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
  3. Weighted Average Cost Of Capital - WACC

    Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is ...
  4. Basis Point (BPS)

    A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly ...
  5. Sharing Economy

    An economic model in which individuals are able to borrow or rent assets owned by someone else.
  6. Unlevered Beta

    A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta ...
Trading Center