Estimated Recovery Value (ERV)

You were a wildcatter. You wanted to drill for oil on your moose ranch. One of the moose sneezed one day and caught on fire.

Macabre Moose Burgers was not the area in which you wanted to invest; rather, you paid $3 million for an oil drilling rig. You dug and dug and dug. But there was no oil to be found. So now you have to sell what's left of your very used oil drilling equipment. You estimated when you bought it that it would have a recovery value of $1.2 million, to generate a long-term capital tax loss of $1.8 million.

Wisely, you planned ahead and offset that loss with a realized gain of $1.8 million from the sale of AMZN you wisely bought 8 years ago.