What does capital loss mean on the CPA exam?
Capital loss. Loss on the sale of a capital asset. An individual may deduct only 3,000 a year against ordinary income; the rest carries forward.
Defined against Sec. 1211(b).
Which CPA exam sections use capital loss?
Capital loss appears in the REG section of the CPA exam.
Related terms
- ordinary loss: A loss deductible against ordinary income without the capital loss limits.
- capital gain net income: Capital gains minus capital losses for the year, long-term and short-term combined.
- disallowed loss: A loss the Code refuses to let you deduct, typically on a sale to a related person or a wash sale.
- net capital gain: Net long-term capital gain minus net short-term capital loss.
- net operating loss: A year in which allowable deductions exceed gross income.
- capital asset: For tax, almost everything a taxpayer owns EXCEPT inventory, receivables, and depreciable or real property used in a trade or business.