Short-Term Loss


DEFINITION of 'Short-Term Loss'

A capital loss realized on the sale or exchange of a capital asset that has been held for exactly one year or less. Net short-term losses are limited to a maximum deduction of $3,000 per year, which can be used against earned or other ordinary income.

BREAKING DOWN 'Short-Term Loss'

Short-term losses are determined by calculating all short term gains and losses declared on Part II of Schedule D. If the net figure is a loss, then any amount above $3000 must be deferred until the following year. For example, if a taxpayer has a net short-term capital loss of $10,000, then he can declare a $3000 loss each year for three years, deducting the final $1000 in the fourth year following the sale of the assets.

  1. Capital Loss

    The loss incurred when a capital asset (investment or real estate) ...
  2. Schedule D

    A U.S. income tax form used by taxpayers to report their realized ...
  3. Realized Loss

    A loss is recognized when assets are sold for a price lower than ...
  4. Short Term

    1. In general, holding an asset for short period of time. 2. ...
  5. Short-Term Gain

    A capital gain realized by the sale or exchange of a capital ...
  6. Accountant

    A professional who performs accounting functions such as audits ...
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