When your annual tax return is prepared, all capital gains/losses from all sources will be consolidated together on Schedule D, attached to your form 1040.
All sales are divided into two groups:
- Short-Term: Assets held for one year or less before being sold. Short-term capital gains are taxed at your ordinary income tax rates.
- Long-Term: Assets held for more than one year before being sold. Long-term capital gains are generally taxed at more favorable rates (0%, 15%, or 20%, depending on your income).
The net result of short-term and long-term gains/losses are combined to determine the net capital gains amount. If there is a net loss, up to 3,000 can be deducted from other income, the remainder of the loss will carry over to future tax years.
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