Can short-term capital gains be offset with long-term capital losses?
Before a loss from one category, short or long term, can offset gain from the other category, the losses and gains from each category must be combined to arrive at a net gain or loss from that category. Then, the net gain or loss from each category is combined. When you carry a capital loss over to the following year, it retains its character as long-term or short-term and must be first combined with the other entries in its category.
Before a loss from one category, short or long term, can offset gain from the other category, the losses and gains from each category must be combined to arrive at a net gain or loss from that category. Then, the net gain or loss from each category is combined. When you carry a capital loss over to the following year, it retains its character as long-term or short-term and must be first combined with the other entries in its category. Refer to Reporting Capital Gains and Losses in Publication 550 (PDF), Investment Income and Expenses.
