Well, not exactly. The mechanics of the deduction of losses dictates that capital losses are first deducted against capital gains. So If you have, say, $15,000 of capital gains then you can deduct up to $15,000 of capital losses against that gain, netting to $0. Continuing our example, if you have more than $15,000 of capital losses then only $3,000 of the "excess" loss can be deducted against "ordinary" income. ($1,500 if filing "married-separate".)
Any capital loss beyond that $3,000 is carried forward. The cycle repeats with carried forward losses first applied against capital gains and if there's still loss left over, up to $3,000 of that loss gets deducted against ordinary income.
Tom Young
