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in determining the base for the section 1 income tax. Section
165 limits the allowance of capital losses to what is allowed in
sections 1211 and 1212.
Section 1211(b) allows, for individuals, capital losses only
to the extent of capital gains, plus no more than $3,000.6
Section 1211(a) provides a much more limited capital loss
allowance for corporations. Section 1212 provides for capital
loss carrybacks and carryovers; those rules are in general more
generous to corporations than to individuals. Respondent noted
petitioners’ eligibility for capital loss carryovers treatment;
petitioners do not claim eligibility for carryback treatment.
As a result of the foregoing, although capital gains and
losses are thrown into the mix of income categories that result
6 Section 1211(b) provides as follows:
SEC. 1211. LIMITATION ON CAPITAL
LOSSES.
* * * * * * *
(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--
(1) $3,000 ($1,500 in the case
of a married individual filing a
a separate return), or
(2) the excess of such losses
over such gains.
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Last modified: May 25, 2011