Capital Gains and Losses

What this video covers

• The exact one-year dividing line for short-term versus long-term classification, and why 366 days is the magic number
• Why exactly one year of holding is still short-term, since the holding period begins the day after purchase (trade date plus one)
• The default 15% long-term capital gains rate assumption for the exam, unless the question states otherwise
• How to calculate capital gain (sale proceeds minus adjusted cost basis) and capital loss (adjusted cost basis minus sale proceeds)
• The netting sequence: capital losses offset capital gains dollar for dollar with no limit before touching ordinary income
• The $3,000 maximum net capital loss deduction against ordinary income per year, and the $1,500 limit for married filing separately
• Why unused capital losses carry forward indefinitely to future tax years and never expire