topic If I have $100,000 in capital gains, then I lose ALL my money from a bad investment, do I still owe taxes on the $100,000 capital gains even though I have 'no money'? in Investors & landlords

If I have $100,000 in capital gains, then I lose ALL my money from a bad investment, do I still owe taxes on the $100,000 capital gains even though I have 'no money'?

dmgarland — Tue, 04 Jun 2019 19:45:10 GMT

I am referring to short term capital gains in the stock market. If I make a great trade, then it's followed up by a bad trade (total loss of whole account value), how am I expected to pay taxes on the $100k in capital gains?

All the capital gains and losses occurring in the same ye...

MichaelL1 — Tue, 04 Jun 2019 19:45:13 GMT

All the capital gains and losses occurring in the same year will be applied against each other to determine the overall capital gain or loss for the year.

Losses on your investments are first used to offset capital gains of the same type. So short-term losses are first deducted from short-term gains, and long-term losses are deducted against long-term gains.

Short-term is anything held less than one year.

See this link for more detail.

https://turbotax.intuit.com/tax-tips/investments-and-taxes/capital-gains-and-losses/L7GF1ouP8

Re: If I have $100,000 in capital gains, then I lose ALL my money from a bad investment, do I still owe taxes on the $100,000 capital gains even though I have 'no money'?

jakeallen2126 — Sat, 17 Oct 2020 15:53:49 GMT

So how does this work if you are day trading and take a total loss and have closed all positions before Dec 1st. I was reading about wash sales and I am worried I could owe on gains and will not get to claim losses on short term investments.

Re: If I have $100,000 in capital gains, then I lose ALL my money from a bad investment, do I still owe taxes on the $100,000 capital gains even though I have 'no money'?

Critter-3 — Sat, 17 Oct 2020 23:49:26 GMT

As long as you don't rebuy the same stocks you sold within a 30 day window after you close your positions then the losses will not be suspended.

Re: If I have $100,000 in capital gains, then I lose ALL my money from a bad investment, do I still owe taxes on the $100,000 capital gains even though I have 'no money'?

Anonymous — Sun, 18 Oct 2020 01:43:24 GMT

wash sales won't matter. you say you had no open positions in December 2019. so it would not be possible to establish positions in January 2020 that would be within the 30 day window that would result in losses in 2019 being suspended. on wash sales the broker would add the disallowed loss to the cost/basis of the shares that created the wash sale so selling them and not reestablishing a position on them within 30 days would result in recognizing the total loss in 2019.