Long-Term Capital Gain or Loss

There exist two types of torture inflicted by the tax collecting man upon his poor citizens in the kingdom. We are tortured in the worst of ways through short-term capital gain tax rates, which are the same as ordinary income tax rates (i.e. high). The other type of tax is a long-term one, which carries mercifully less bone-stretching, fire-burning, and eyeball-poking.

Investors with gains that have lasted over a year receive the more merciful, long-term capital gain tax rate, and if they have sold investments at a loss, which have existed over a year, then those also receive the lower tax loss rate.

The key idea here is that like-for-like must be matched. Long-term gains get canceled by long-term losses; long-term gains do not go against ordinary income losses...in the same way that The Punisher would not mix up an eyeball-poking knife with a skin-flaying one.

See: Capital Gains. See: Capital Loss.