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Level 1

For a business, can capital gains be offset by ordinary losses?

I know that capital losses cannot offset ordinary income. But I'm wondering about the opposite. Can capital gains be reduced by ordinary losses?

For example, let's say my corporation made $100,000 profit by selling stocks and bonds. But it lost $25k in expenses like payroll, marketing etc. So is the taxable income $100k or $75k? I'm guessing it's $75k since capital gains are taxed as ordinary income. But I want to make sure that's the case.

(note: this is for a C Corporation)

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Accepted Solutions
Level 11

For a business, can capital gains be offset by ordinary losses?

Yes that should be correct.

See Pub 542 for more information and also the instructions for F1120

https://apps.irs.gov/app/picklist/list/priorFormPublication.html?resultsPerPage=200&sortColumn=sortO...

Going through F1120, capital gain is included in the total income section.

Deductions are listed below.  In your example, barring any "limited" deductions, taxable income should be $75K.



2 Replies
Level 11

For a business, can capital gains be offset by ordinary losses?

Yes that should be correct.

See Pub 542 for more information and also the instructions for F1120

https://apps.irs.gov/app/picklist/list/priorFormPublication.html?resultsPerPage=200&sortColumn=sortO...

Going through F1120, capital gain is included in the total income section.

Deductions are listed below.  In your example, barring any "limited" deductions, taxable income should be $75K.



Level 1

For a business, can capital gains be offset by ordinary losses?

Thanks!