Question

Securities can not have a loss deducted until they are sold. True or False?

1) True
2) False

Answer 1

Securities can have a loss deducted even if they have not been sold.

Step-by-step explanation:

The statement is False. Securities can have a loss deducted even if they have not been sold.

When an individual sells a security at a loss, they can use that loss to offset any capital gains they may have. However, if they do not have any capital gains in the same tax year, they can use the loss to offset other income, up to a certain limit.

For example, let's say someone bought shares of a company's stock for $1,000 and later sold them for $800, resulting in a loss of $200. They can deduct this loss on their tax return, reducing their taxable income by $200.