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Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29580
Experience:  Taxes, Immigration, Labor Relations
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We sold a limited partnership in 2015 and have a substantial

Customer Question

We sold a limited partnership in 2015 and have a substantial capital gain. We also have some "collectibles" that are worth probably half what we paid for them 3 or more years ago. We have no "collectibles" to sell at any gain. So here is the question. If we sell some of our "collectibles" at a loss, can that loss directly reduce or mitigate the capital gains tax we would otherwise pay? For 2015 we expect to be in the 10 to 15% income tax bracket. Thanks
Submitted: 2 years ago.
Category: Tax
Expert:  Lev replied 2 years ago.
Yes - if you realize a capital loss on investment assets - not personal assets - that capital loss may be fully used to offset other capital gains.If these are personal assets - the loss is not deductible.
Expert:  Lev replied 2 years ago.
Here are ten facts from the IRS about gains and losses and how they can affect your Federal income tax return.Almost everything you own and use for personal purposes, pleasure or investment is a capital asset.When you sell a capital asset, the difference between the amount you sell it for and your basis – which is usually what you paid for it – is a capital gain or a capital loss.You must report all capital gains.You may deduct capital losses only on investment property, not on property held for personal use.Capital gains and losses are classified as long-term or short-term, depending on how long you hold the property before you sell it. If you hold it more than one year, your capital gain or loss is long-term. If you hold it one year or less, your capital gain or loss is short-term. If you have long-term gains in excess of your long-term losses, you have a net capital gain to the extent your net long-term capital gain is more than your net short-term capital loss, if any.The tax rates that apply to net capital gain are generally lower than the tax rates that apply to other income. For 2010, the maximum capital gains rate for most people is 15%. For lower-income individuals, the rate may be 0% on some or all of the net capital gain. Special types of net capital gain can be taxed at 25% or 28%.If your capital losses exceed your capital gains, the excess can be deducted on your tax return and used to reduce other income, such as wages, up to an annual limit of $3,000, or $1,500 if you are married filing separately.If your total net capital loss is more than the yearly limit on capital loss deductions, you can carry over the unused part to the next year and treat it as if you incurred it in that next year.Capital gains and losses are reported on form 8949 - then transferred to Schedule D, Capital Gains and Losses, and then transferred to line 13 of Form 1040.