Question

Which of the following is a deductible loss for income tax purposes?

a. Losses on the sale of personal use assets.
b. Losses on the subsequent sale of property gifted or sold to a related party when its fair market value is less than the original owner's adjusted basis and the sale price is greater than the fair market value at the time of the gift but less than the donors original basis.
c. A loss from a wash sales transaction.
d. Net long-term capital losses in excess of $3,000.

Answer 1

d. Net long-term capital losses in excess of $3,000.

Step-by-step explanation:

A net long-term capital losses in excess of $3,000 is a deductible loss for income tax purposes.

For instance, in a tax year, if an individual has up to $3,000 of net long-term capital losses, this would be considered a form of income rather than a capital gain.

Furthermore, if an individual accrues a net long-term capital losses in excess of $3,000, this loss is deductible and are carried over indefinitely to subsequent tax payments in the future.