Capital Losses

A capital loss is the difference between the purchase price and the sale price of an asset, where the sale price is lower than the purchase price. Capital gains income taxes can be offset by capital losses. Net losses of more than $3,000 can be carried over to the following tax year to offset gains or reduce taxable income. Substantial losses above $3,000 carry forward to subsequent years until the amount of the loss has been spent. Capital losses are reported on Form 8949.