Can I offset short-term capital gains from mutual fund distributions with short-term capital losses from sale of stocks?

[jatron]

Suppose I have $10,000 short-term capital losses from sale of stocks, $10,000 short-term capital gains from mutual fund distributions, and $20,000 long-term capital gains from sale of stocks.

Can I offset $10,000 short-term capital gains from mutual fund distributions with $10,000 short-term capital losses from sale of stocks? If so, what forms need to be filled out? I'm asking because the tax return prepared by TurboTax is netting the $10,000 short-term capital losses from sale of stocks against the $20,000 long-term capital gains from sale of stocks, which is less effective since long-term capital gains are only taxed at 15% (as opposed to being taxed at the regular income rate).

[JohnB5677]

Yes, a short term capital gain can offset a long term capital loss.

Typically, the short term capital loss carryover would be used to offset the short term capital losses, and the long term capital loss carryover would be used to offset the long term capital losses in a current year.

However, when there is only one type of capital loss being carried over, it can be used to offset the current year capital loss regardless of it is for a short term or long term capital loss.

And yes, TurboTax will know to apply the capital loss carryover accordingly as long as you have the capital loss carryover entered into the program.

[jatron]

My question is if I can offset short-term capital gains from mutual fund distributions with short-term capital losses from sale of stocks? If so, how do I do this in my tax return?

[ReneeM7122]

Yes, you can offset short-term capital gains from mutual fund distributions with short-term capital losses from sale of stocks, but there are limits. Losses on your investments are first used to offset capital gains of the same type. So, short-term losses are first deducted against short-term gains, and long-term losses are deducted against long-term gains. Net losses of either type can then be deducted against the other kind of gain.

Here is a TurboTax article about capital losses, and another article with more details.  

To report these on your taxes, you'll need TurboTax Premier.  The program will prompt you with questions that will help you report the capital losses and carry them to your tax return.