Tax implications of ST vs LT losses?

[steadyeddy]

We all know that gains ST vs LT have different tax implications.

Is the same true for losses? i.e., are ST losses tax treated differently than LT losses?

[sam]

Lets assume there is no WASH rules apply and you did not buy/sell same/similar securities in multiple accounts taxable or IRA etc.

Long terms losses comes off from long term gains
Short term losses come off from short term gain.

Then which ever is most that will eat up other stuff. Lets say you have $15K long term gain and $5k short term gain

But you have $5k long term loss and $20k short term loss


15- 5 = $10 Long term gain
5-(-20) = -$15K short term loss

now 10- (-15) = net -5k loss but you can take 3k loss against ordinary income and $2k loss will carry forward to next year.

I am not a tax accountant and this is NOT recommendation or suggestion as well. This is my understanding how short and long term taxes are handled in tax software.

[yogibearbull]

sam, is correct. But at the end, everything is netted, and if net loss, up to $3K can offset ordinary income.

I may delay selling at gain if 12-mo window is near.

But I will sell at loss for max/high tax-loss harvesting (TLH) impact and don't worry whether it is ST/LT.

[steadyeddy]

Thanks. Appreciate the responses.

Bottomline: If I have enough losses to cover BOTH the LT and ST gains, it doesn't matter whether the losses are ST or LT. However, if gains are larger than losses in a given year, the distinction between the ST vs LT gains makes a tax difference.

I think I get it.