what capital loss and is needs
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A long-term capital gain or loss is the gain or loss stemming from the sale of a qualifying investment that has been owned for longer than 12 months at the time of sale. This may be contrasted with short-term gains or losses on investments that are disposed of in less than 12 months time. Long-term capital gains are often given more favorable tax treatment than short-term gains.
Understanding Long-Term Capital Gain or Loss
The long-term capital gain or loss amount is determined by the difference in value between the sale price and the purchase price. This figure is either the net profit or loss that the investor experienced when selling the asset. Short-term capital gains or losses are determined by the net profit or loss an investor experienced when selling an asset that was owned for less than 12 months. The Internal Revenue Service (IRS) assigns a lower tax rate to long-term capital gains than short-term capital gains.
A taxpayer will need to report the total of their capital gains earned for the year when they file their annual tax returns because the IRS will treat these short-term capital gains earnings as taxable income. Long-term capital gains are taxed at a lower rate, which as of 2019 ranged from 0 to 20 percent, depending on the tax bracket that the taxpayer is in.
When it comes to capital gains losses, both short-term and long-term losses are treated the same. Taxpayers can claim these losses against any long-term gains they may have experienced during the filing period. These figures are all reported on tax Form 1040.
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