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The loss incurred when an asset is sold for less than its purchase price.
Capital losses can be used to offset capital gains for tax purposes, reducing your overall tax liability. If your losses exceed your gains, you can deduct up to $3,000 per year against ordinary income in the U.S., carrying forward any remaining losses to future years. This creates a strategy known as tax-loss harvesting, where investors deliberately sell losing positions to capture tax benefits. The wash-sale rule prevents you from repurchasing a substantially identical security within 30 days of selling at a loss.