Video: Capital Losses

In this lesson, Nick Palazzolo, CPA, breaks down the intricacies of capital losses and their implications for taxpayers. He dives deep into the scenarios where an investor might encounter financial setbacks from the sale or disposition of capital assets, like stocks, bonds, and real estate. With an emphasis on the importance of understanding the IRS rules, Nick meticulously explains how individuals can use a net capital loss to offset other types of income, with a particular focus on the annual $3,000 deduction limit for both single and married filing jointly taxpayers. He also points out the potential to carry forward losses indefinitely and touches on the treatment of personal bad debts and worthless stock as capital losses. Additionally, Nick underscores the significance of practicing with multiple choice questions and simulations (SIMs) to grasp the application of these concepts in real-world tax scenarios.