As explained in this article, I understand that short term capital losses can be used to offset long term capital gains:

Long-term gain with short-term loss

Again we have to consider two scenarios. If the gain is bigger than the loss, you have a net long-term gain and get to take advantage of the favorable rates for the net gain. If the loss is larger, it is a net short-term loss. Just like the previous situation, you can use up to $3,000 of that loss against other types of income, with any balance carrying forward to the next year as a short-term loss.

Since long term capital gains are taxed at a fixed rate, it seems sub-optimal to use short term losses to offset them. My question is, is it a matter of choice? That is to say if I have short term losses and long term gains, can I choose to pay taxes on my long term capital gains and use the short term capital losses in the next tax year when I may have short term capital gains?

1 Answer 1


It is not a matter of choice. Once you enter the loss on your tax return, the instructions require you to compute your tax in a specific way. You only carry forward net losses in excess of $3,000. To carry forward anything else you would have to violate the instructions. And to omit the loss and try to claim it next year would also not work because the sale would be in the wrong tax year. The best strategy is, when possible, to delay realizing a loss if you may later have short-term gains to net against.

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