a STCL c/o is first applied to net short-term gains for the current year. if there is an excess loss remaining after this or you had current year net short-term losses, these losses are next applied to any net long-term gains for the current year. you can see how this works by reviewing schedule D. up to $3,000 ($1,500 married filing separately) of any excess net capital losses can be applied to offset other income. This is the law which Turbotax follows.
