(a) Corporations In the case of a corporation, losses from sales or exchanges of capital assets shall be allowed only to the extent of gains from such sales or exchanges.
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(b) Other taxpayers In the case of a taxpayer other than a corporation, losses from sales or exchanges of capital assets shall be allowed only to the extent of the gains from such sales or exchanges, plus (if such losses exceed such gains) the lower of—
Amended 1969, 1976, 1986
- 1986 Pub. L. 99-514 Pub. L. 99–514 amended subsec. (b) generally, substituting present provisions for provisions which had declared in: par. (1), general rule for limitation on capital losses for taxpayer other than corporation; in par. (2), meaning of term “applicable amount”; and in par. (3), rule relating to computation of taxable income.
- 1976 Pub. L. 94-455 Pub. L. 94–455, § 501(b)(6), struck out last sentence “If the taxpayer elects to pay the optional tax imposed by section 3, ‘taxable income’ as used in this subsection shall read as ‘adjusted gross income’.”
- 1969 Pub. L. 91-172 Pub. L. 91–172 provided for only 50 percent of an individual’s long-term capital losses to be offset against his ordinary income up to the $1,000 limit although short-term capital losses continue to be fully deductible within the $1,000 limit and the deduction of capital losses against ordinary income for married persons filing separate returns to be limited to $500 for each spouse rather than the $1,000 formerly allowed.
Cases: Perkins v. Commissioner, 129 T.C. 58 (2007)
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(1) $3,000 ($1,500 in the case of a married individual filing a separate return), or
Amended 1976, 1977
- 1977 Pub. L. 95-30 Pub. L. 95–30 inserted “reduced (but not below zero) by the zero bracket amount” after “taxable year”.
- 1976 Pub. L. 94-455 Pub. L. 94–455, § 1401(a), substituted “the applicable amount” for “$1,000”.
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(2) the excess of such losses over such gains.
Amended 1976
- 1976 Pub. L. 94-455 Pub. L. 94–455, § 1401(b), substituted provision relating to “applicable amount” for prior provision limiting amount of capital losses for married individuals and reading “In the case of a husband or wife who files a separate return, the amount specified in paragraph (1)(B) shall be $500 in lieu of $1,000.”