How is a capital gain or loss calculated?
The calculation for a capital gain or loss is straightforward; it starts with the selling price of your capital asset minus its cost basis (what you originally paid for it).
If the number is positive – in other words, you made money on the sale – that's your capital gain.
On the other hand, if the number is negative (you lost money) you have a capital loss unless the item is personal-use property, which can never be deducted as a capital loss.
Your net capital gain/loss is calculated by subtracting your capital losses from your capital gains (Schedule D). If you have a net capital loss, you're allowed to deduct up to $3,000 ($1,500 if married filing separately) per year as a capital loss. If your net capital loss is more than the yearly limit, you can carry the loss to next year's return as a capital loss carryover.
Janice purchased 100 shares of stock for $3,000 and later sold it for $5,000. She has a $2,000 capital gain.
Terrence lost $2,400 when he sold his coin collection. He has a capital loss and can deduct $2,400 of the loss on this year's taxes.
Richard sold shares of stock in 5 different companies, and the result was a net capital loss of $5,400. He can deduct $3,000 of the loss on this year's taxes and has a $2,400 capital loss carryover for next year.