Some Things To Be Aware Of Regarding Capital Gains And Losses
Many people are not aware of the fact that their capital assets are all the things they own and use for either investment or personal use purposes. This may include bonds and stocks held in a personal account, as well as household furnishings and their home itself. The difference between what one paid for a capital asset and what they sold it for is recognized as either a capital loss or a capital gain for them.
Let’s look at some facts about how a person’s income tax return might be affected by losses or by gains according to the IRS.
1. Basically, a capital asset is everything a person uses for their investment, pleasure or personal issues.
2. The difference between what a person sells their capital asset as opposed to what they paid for it is either a capital loss or a capital gain for them.
3. All capital gains absolutely must be reported.
4. Capital losses may not be deducted on personal use property, but only on investment property losses.
5. It is either short term or long term that capital gains are classified as.
6. If long term losses are exceeded by long term gains, the difference is then a net capital gain.
7. Usually lower than the tax rates applied to other income are those applied to net capital gains.
8. If exceeding any capital gains are in fact capital losses, it can and should be deducted from other income.
9. Capital loss deductions can be carried over from one year to the next if in fact they exceed the yearly limit.
10. It is important this year that all involved with these issues refer to and use Form 8949.
Talking About Capital Gains by Steve