Capital loss and capital gains

I have a short term capital loss of approximately $8000 for 2016.. I just sold a position and had a short term capital gain of approx $4000. Will the loss be applied to the gain?.. I have read somewhere that the maximum loss that can be applied in any one year is $3000 and this seems insane. I know that anything not claimed this year will be carried over to subsequent years

posted

The maximum loss that can be applied is $3,000 and the balance is carried over to future years. However, the maximum loss is the net capital loss. In your case, that would be $8,000 - $4,000, or a $4,000 net loss. $3,000 would be deductible in 2016 and the balance next year.