§1211 — Limitation on capital losses
82 citing cases
Statute Text — 26 U.S.C. §1211
In the case of a corporation, losses from sales or exchanges of capital assets shall be allowed only to the extent of gains from such sales or exchanges.
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—
$3,000 ($1,500 in the case of a married individual filing a separate return), or
the excess of such losses over such gains.
Treasury Regulations
-
Treas. Reg. §1.1211-1Limitation on capital losses
(a) Corporations—(1) General rule. In the case of a corporation, there shall be allowed as a deduction an amount equal to the sum of:
(i) Losses sustained during the taxable year from sales or exchanges of capital assets, plus
(ii) The aggregate of all losses sustained in other taxable years which are treated as a short-term capital loss in such taxable year pursuant to section 1212(a)(1),
but only to the extent of gains from such sales or exchanges of capital assets in such taxable year.
(2) Banks. See section 582(c) for modification of the limitation under section 1211(a) in the case of a bank, as defined in section 581.
(b) Taxpayers other than corporations—(1) General rule. In the case of a taxpayer other than a corporation, there shall be allowed as a deduction an amount equal to the sum of:
(i) Losses sustained during the taxable year from sales or exchanges of capital assets, plus
(ii) The aggregate of all losses sustained in other taxable years which are treated either as a short-term capital loss or as a long-term capital loss in such taxable year pursuant to section 1212(b), but only to the extent of gains from sales or exchanges of capital assets in such taxable year, plus (if such losses exceed such gains) the additional allowance or transitional additional allowance deductible under section 1211(b) from ordinary income for such taxable year. The additional allowance deductible under section 1211(b) shall be determined by application of subparagraph (2) of this paragraph, and the transitional additional allowance by application of subparagraph (3) of this paragraph.
(2) Additional allowance. Except as otherwise provided by subparagraph (3) of this paragraph, the additional allowance deductible under section 1211(b) for taxable years beginning after December 31, 1969, shall be the least of:
(i) The taxable income for the taxable year reduced, but not below zero, by the zero bracket amount (in the case of taxable years beginning before January 1, 1977, the taxable income for the taxable year);
(ii) $3,000 ($2,000 for taxable years beginning in 1977; $1,000 for taxable years beginning before January 1, 1977); or
(iii) The sum of the excess of the net short-term capital loss over the net long-term capital gain, plus one-half of the excess of the net long-term capital loss over the net short-term capital gain.
(3) Transitional additional allowance—(i) In general. If, pursuant to the provisions of § 1.1212-1(b) and subdivision (iii) of this subparagraph, there is carried to the taxable year from a taxable year beginning before January 1, 1970, a long-term capital loss, and if for the taxable year there is an excess of net long-term capital loss over net short-term capital gain, then, in lieu of the additional allowance provided by subparagraph (2) of this paragraph, the transitional additional allowance deductible under section 1211(b) shall be the least of:
(a) The taxable income for the taxable year reduced, but not below zero, by the zero bracket amount (in the case of taxable years beginning before January 1, 1977, the taxable income for the taxable year);
(b) $3,000 ($2,000 for taxable years beginning in 1977; $1,000 for taxable years beginning before January 1, 1977); or
(c) The sum of the excess of the net short-term capital loss over the net long-term capital gain; that portion of the excess of the net long-term capital loss over the net short-term capital gain computed as provided in subdivision (ii) of this subparagraph; plus one-half of the remaining portion of the excess of the net long-term capital loss over the net short-term capital gain.
(ii) Computation of specially treated portion of excess long-term capital loss over net short-term capital gain. In determining the transitional additional allowance deductible as provided by this subparagraph, there shall be applied thereto in full on a dollar-for-dollar basis the excess of net long-term capital loss over net short-term capital gain (computed with regard to capital losses carried to the taxable year) to the extent that the long-term capital losses carried to the taxable year from taxable years beginning before January 1, 1970, as provided by § 1.1212-1(b) and subdivision (iii) of this subparagraph, exceed the sum of (a) the portion of the capital gain net income (net capital gain for taxable years beginning before January 1, 1977) actually realized in the taxable year (i.e., computed without regard to capital losses carried to the taxable year) which consists of net long-term capital gain actually realized in the taxable year, plus (b) the amount by which the portion of the capital gain net income (net capital gain for taxable years beginning before January 1, 1977) actually realized in the taxable year (i.e., computed without regard to capital losses carried to the taxable year) which consists of net short-term capital gain actually realized in the taxable year exceeds the total of short-term capital losses carried to the taxable year from taxable years beginning before January 1, 1970, as provided by § 1.1212-1(b) and subdivision (iv) of this subparagraph.
The amount by which the net long-term capital losses carried to the taxable year from taxable years beginning before January 1, 1970, exceeds the sum of (a) plus (b) shall constitute the transitional net long-term capital loss component for the taxable year for the purpose of this subparagraph.
(iii) Carryover of certain long-term capital losses not utilized in computation of transitional additional allowance. If for a taxable year beginning after December 31, 1969, the transitional net long-term capital loss component determined as provided in subdivision (ii) of this subparagraph exceeds the amount of such component applied to the transitional additional allowance for the taxable year as provided by subdivision (i) of this subparagraph and subparagraph (4)(ii) of this paragraph, then such excess shall for the purposes of this subparagraph be carried to the succeeding taxable year as long-term capital losses from taxable years beginning before January 1, 1970, for utilization in the computation of the transitional additional allowance in the succeeding taxable year as provided in subdivisions (i) and (ii) of this subparagraph. In no event, however, shall the amount of such component carried to the following taxable year as otherwise provided by this subdivision exceed the total of net long-term capital losses actually carried to such succeeding taxable year pursuant to section 1212(b) and § 1.1212-1(b).
(iv) Carryover of certain short-term capital losses not utilized in computation of additional allowance or transitional additional allowance. If for a taxable year beginning after December 31, 1969, the total short-term capital losses carried to such year from taxable years beginning before January 1, 1970, as provided by § 1.1212-1(b) and this subdivision exceed the sum of:
(a) The portion of the capital gain net income (net capital gain for taxable years beginning before January 1, 1977) actually realized in the taxable year (i.e., computed without regard to capital losses carried to the taxable year) which consists of net short-term capital gain actually realized in the taxable year, plus
(b) The amount by which the portion of the capital gain net income (net capital gain for taxable years beginning before January 1, 1977) actually realized in the taxable year (i.e., computed without regard to capital losses carried to the taxable year) which consists of net long-term capital gain actually realized in the taxable year exceeds the total long-term capital losses carried to the taxable year from taxable years beginning before January 1, 1970, as provided in § 1.1212-1(b) and subdivision (iii) of this subparagraph,
then such excess shall constitute the transitional net short-term capital loss component for the taxable year, and to the extent such component also exceeds the net short-term capital loss applied to the additional allowance (as provided in subparagraphs (2) and (4)(i) of this paragraph) or the transitional additional allowance (as provided by subdivision (i) of this subparagraph and subparagraph (4)(i) of this paragraph) for the taxable year shall be carried to the succeeding taxable year as short-term capital losses from taxable years beginning before January 1, 1970, for utilization in such succeeding taxable year in the computation of the additional allowance (as provided by subparagraph (2) of this paragraph) or the transitional additional allowance (as provided by subdivision (i) and (ii) of this subparagraph). In no event, however, shall the amount of such component so carried to the following taxable year as otherwise provided by this subdivision exceed the total of net short-term capital losses actually carried to such succeeding taxable year pursuant to section 1212(b) and § 1.1212-1(b).
(v) Scope of rules. The rules provided by this subparagraph are for the purpose of computing the amount of the transitional additional allowance deductible for the taxable year pursuant to the provisions of section 1212(b)(3) and this subparagraph. More specifically, their operation permits the limited use of a long-term capital loss carried to the taxable year from a taxable year beginning before December 31, 1969, in full on a dollar-for-dollar basis in computing the transitional additional allowance deductible for the taxable year. These rules have no application to, or effect upon, a determination of the character or amount of capital gain net income (net capital gain for taxable years beginning before January 1, 1977) reportable in the taxable year. See paragraph (b)(1) of this section and § 1.1212-1 for the determination of the amount and character of capital gains and losses reportable in the taxable year. Further, except to the extent that their application may affect the amount of the transitional additional allowance deductible for the taxable year and thus the amount to be treated as short-term capital loss for carryover purposes under section 1212(b) and § 1.1212-1(b)(2), these rules have no effect upon a determination of the character or amount of capital losses carried to or from the taxable year pursuant to section 1212(b) and § 1.1212-1(b).
(4) Order of application of capital losses to additional allowance or transitional additional allowance. In applying the excess of the net short-term capital loss over the net long-term capital gain and the excess of the net long-term capital loss over the net short-term capital gain to the additional allowance or transitional additional allowance deductible under section 1211(b) and this paragraph, such excesses shall, subject to the limitations of subparagraph (2) or (3) of this paragraph, be used in the following order:
(i) First, there shall be applied to the additional allowance or transitional additional allowance the excess, if any, of the net short-term capital loss over the net long-term capital gain.
(ii) Second, if such transitional additional allowance exceeds the amount so applied thereto as provided in subdivision (i) of this subparagraph, there shall next be applied thereto as provided in subparagraph (3) of this paragraph the excess, if any, of the net long-term capital loss over the net short-term capital gain to the extent of the transitional net long-term capital loss component for the taxable year computed as provided by subdivision (ii) of subparagraph (3) of this paragraph.
(iii) Third, if such additional allowance or transitional additional allowance exceeds the sum of the amounts so applied thereto as provided in subdivisions (i) and (ii) of this subparagraph, there shall be applied thereto one-half of the balance, if any, of the excess net long-term capital loss not applied pursuant to the provisions of subdivision (ii) of this subparagraph.
(5) Taxable years beginning prior to January 1, 1970. For any taxable year beginning prior to January 1, 1970, subparagraphs (2) and (3) of this paragraph shall not apply and losses from sales or exchanges of capital assets shall be allowed as a deduction only to the extent of gains from such sales or exchanges, plus (if such losses exceed such gains) the taxable income of the taxpayer or $1,000, whichever is smaller.
(6) Special rules. (i) For purposes of section 1211(b) and this paragraph, taxable income is to be computed without regard to gains or losses from sales or exchanges of capital assets and without regard to the deductions provided in section 151 (relating to personal exemptions) or any deduction in lieu thereof. For example, the deductions available to estates and trusts under section 642(b) are in lieu of the deductions allowed under section 151, and, in the case of estates and trusts, are to be added back to taxable income for the purposes of section 1211(b) and this paragraph.
(ii) For taxable years beginning before January 1, 1976, in case the tax is computed under section 3 and the regulations thereunder (relating to optional tax tables for individuals), the term taxable income as used in section 1211(b) and this paragraph shall be read as adjusted gross income.
(iii) In the case of a joint return, the limitation under section 1211(b) and this paragraph, relating to the allowance of losses from sales or exchanges of capital assets, is to be computed and the net capital loss determined with respect to the combined taxable income and the combined capital gains and losses of the spouses.
(7) Married taxpayers filing separate returns—(i) In general. In the case of a husband or a wife who files a separate return for a taxable year beginning after December 31, 1969, the $3,000, $2,000, and $1,000 amounts specified in subparagraphs (2)(ii) and (3)(i)(b) of this paragraph shall instead be $1,500, $1,000, and $500, respectively.
(ii) Special rule. If, pursuant to the provisions of § 1.1212-1(b) and subparagraph (3) (iii) or (iv) of this paragraph, there is carried to the taxable year from a taxable year beginning before January 1, 1970, a short-term capital loss or a long-term capital loss, the $1,500, $1,000 and $500 amounts specified in subdivision (i) of this subparagraph shall instead be maximum amounts of $3,000, $2,000, and $1,000 respectively, equal to $1,500, $1,000, and $500, respectively, plus the total of the transitional net long-term capital loss component for the taxable year computed as provided by subparagraph (3)(ii) of this paragraph and the transitional net short-term capital loss component for the taxable year computed as provided by subparagraph (3)(iv) of this paragraph.
(8) Examples. The provisions of section 1211(b) may be illustrated by the following examples:
-
Treas. Reg. §1.1211-1(a)The portion of the capital gain net income (net capital gain for taxable years beginning before January 1, 1977) actually realized in the taxable year (i.
The portion of the capital gain net income (net capital gain for taxable years beginning before January 1, 1977) actually realized in the taxable year (i.e., computed without regard to capital losses carried to the taxable year) which consists of net short-term capital gain actually realized in the taxable year, plus
-
Treas. Reg. §1.1211-1(b)The amount by which the portion of the capital gain net income (net capital gain for taxable years beginning before January 1, 1977) actually realized in the taxable year (i.
The amount by which the portion of the capital gain net income (net capital gain for taxable years beginning before January 1, 1977) actually realized in the taxable year (i.e., computed without regard to capital losses carried to the taxable year) which consists of net long-term capital gain actually realized in the taxable year exceeds the total long-term capital losses carried to the taxable year from taxable years beginning before January 1, 1970, as provided in § 1.1212-1(b) and subdivision (iii) of this subparagraph,
then such excess shall constitute the transitional net short-term capital loss component for the taxable year, and to the extent such component also exceeds the net short-term capital loss applied to the additional allowance (as provided in subparagraphs (2) and (4)(i) of this paragraph) or the transitional additional allowance (as provided by subdivision (i) of this subparagraph and subparagraph (4)(i) of this paragraph) for the taxable year shall be carried to the succeeding taxable year as short-term capital losses from taxable years beginning before January 1, 1970, for utilization in such succeeding taxable year in the computation of the additional allowance (as provided by subparagraph (2) of this paragraph) or the transitional additional allowance (as provided by subdivision (i) and (ii) of this subparagraph). In no event, however, shall the amount of such component so carried to the following taxable year as otherwise provided by this subdivision exceed the total of net short-term capital losses actually carried to such succeeding taxable year pursuant to section 1212(b) and § 1.1212-1(b).
-
Treas. Reg. §1.1211-1(c)The sum of the excess of the net short-term capital loss over the net long-term capital gain; that portion of the excess of the net long-term capital loss over the net short-term capital gain computed as provided in subdivision (ii) of this subparagraph; plus one-half of the remaining portion of the excess of the net long-term capital loss over the net short-term capital gain.
The sum of the excess of the net short-term capital loss over the net long-term capital gain; that portion of the excess of the net long-term capital loss over the net short-term capital gain computed as provided in subdivision (ii) of this subparagraph; plus one-half of the remaining portion of the excess of the net long-term capital loss over the net short-term capital gain.
(ii) Computation of specially treated portion of excess long-term capital loss over net short-term capital gain. In determining the transitional additional allowance deductible as provided by this subparagraph, there shall be applied thereto in full on a dollar-for-dollar basis the excess of net long-term capital loss over net short-term capital gain (computed with regard to capital losses carried to the taxable year) to the extent that the long-term capital losses carried to the taxable year from taxable years beginning before January 1, 1970, as provided by § 1.1212-1(b) and subdivision (iii) of this subparagraph, exceed the sum of (a) the portion of the capital gain net income (net capital gain for taxable years beginning before January 1, 1977) actually realized in the taxable year (i.e., computed without regard to capital losses carried to the taxable year) which consists of net long-term capital gain actually realized in the taxable year, plus (b) the amount by which the portion of the capital gain net income (net capital gain for taxable years beginning before January 1, 1977) actually realized in the taxable year (i.e., computed without regard to capital losses carried to the taxable year) which consists of net short-term capital gain actually realized in the taxable year exceeds the total of short-term capital losses carried to the taxable year from taxable years beginning before January 1, 1970, as provided by § 1.1212-1(b) and subdivision (iv) of this subparagraph.
The amount by which the net long-term capital losses carried to the taxable year from taxable years beginning before January 1, 1970, exceeds the sum of (a) plus (b) shall constitute the transitional net long-term capital loss component for the taxable year for the purpose of this subparagraph.
(iii) Carryover of certain long-term capital losses not utilized in computation of transitional additional allowance. If for a taxable year beginning after December 31, 1969, the transitional net long-term capital loss component determined as provided in subdivision (ii) of this subparagraph exceeds the amount of such component applied to the transitional additional allowance for the taxable year as provided by subdivision (i) of this subparagraph and subparagraph (4)(ii) of this paragraph, then such excess shall for the purposes of this subparagraph be carried to the succeeding taxable year as long-term capital losses from taxable years beginning before January 1, 1970, for utilization in the computation of the transitional additional allowance in the succeeding taxable year as provided in subdivisions (i) and (ii) of this subparagraph. In no event, however, shall the amount of such component carried to the following taxable year as otherwise provided by this subdivision exceed the total of net long-term capital losses actually carried to such succeeding taxable year pursuant to section 1212(b) and § 1.1212-1(b).
(iv) Carryover of certain short-term capital losses not utilized in computation of additional allowance or transitional additional allowance. If for a taxable year beginning after December 31, 1969, the total short-term capital losses carried to such year from taxable years beginning before January 1, 1970, as provided by § 1.1212-1(b) and this subdivision exceed the sum of:
-
Treas. Reg. §1.1211-1(i)First, there shall be applied to the additional allowance or transitional additional allowance the excess, if any, of the net short-term capital loss over the net long-term capital gain.
First, there shall be applied to the additional allowance or transitional additional allowance the excess, if any, of the net short-term capital loss over the net long-term capital gain.
(ii) Second, if such transitional additional allowance exceeds the amount so applied thereto as provided in subdivision (i) of this subparagraph, there shall next be applied thereto as provided in subparagraph (3) of this paragraph the excess, if any, of the net long-term capital loss over the net short-term capital gain to the extent of the transitional net long-term capital loss component for the taxable year computed as provided by subdivision (ii) of subparagraph (3) of this paragraph.
(iii) Third, if such additional allowance or transitional additional allowance exceeds the sum of the amounts so applied thereto as provided in subdivisions (i) and (ii) of this subparagraph, there shall be applied thereto one-half of the balance, if any, of the excess net long-term capital loss not applied pursuant to the provisions of subdivision (ii) of this subparagraph.
(5) Taxable years beginning prior to January 1, 1970. For any taxable year beginning prior to January 1, 1970, subparagraphs (2) and (3) of this paragraph shall not apply and losses from sales or exchanges of capital assets shall be allowed as a deduction only to the extent of gains from such sales or exchanges, plus (if such losses exceed such gains) the taxable income of the taxpayer or $1,000, whichever is smaller.
(6) Special rules. (i) For purposes of section 1211(b) and this paragraph, taxable income is to be computed without regard to gains or losses from sales or exchanges of capital assets and without regard to the deductions provided in section 151 (relating to personal exemptions) or any deduction in lieu thereof. For example, the deductions available to estates and trusts under section 642(b) are in lieu of the deductions allowed under section 151, and, in the case of estates and trusts, are to be added back to taxable income for the purposes of section 1211(b) and this paragraph.
(ii) For taxable years beginning before January 1, 1976, in case the tax is computed under section 3 and the regulations thereunder (relating to optional tax tables for individuals), the term taxable income as used in section 1211(b) and this paragraph shall be read as adjusted gross income.
(iii) In the case of a joint return, the limitation under section 1211(b) and this paragraph, relating to the allowance of losses from sales or exchanges of capital assets, is to be computed and the net capital loss determined with respect to the combined taxable income and the combined capital gains and losses of the spouses.
(7) Married taxpayers filing separate returns—(i) In general. In the case of a husband or a wife who files a separate return for a taxable year beginning after December 31, 1969, the $3,000, $2,000, and $1,000 amounts specified in subparagraphs (2)(ii) and (3)(i)(b) of this paragraph shall instead be $1,500, $1,000, and $500, respectively.
(ii) Special rule. If, pursuant to the provisions of § 1.1212-1(b) and subparagraph (3) (iii) or (iv) of this paragraph, there is carried to the taxable year from a taxable year beginning before January 1, 1970, a short-term capital loss or a long-term capital loss, the $1,500, $1,000 and $500 amounts specified in subdivision (i) of this subparagraph shall instead be maximum amounts of $3,000, $2,000, and $1,000 respectively, equal to $1,500, $1,000, and $500, respectively, plus the total of the transitional net long-term capital loss component for the taxable year computed as provided by subparagraph (3)(ii) of this paragraph and the transitional net short-term capital loss component for the taxable year computed as provided by subparagraph (3)(iv) of this paragraph.
(8) Examples. The provisions of section 1211(b) may be illustrated by the following examples:
-
Treas. Reg. §1.1211-1(v)Scope of rules.
Scope of rules. The rules provided by this subparagraph are for the purpose of computing the amount of the transitional additional allowance deductible for the taxable year pursuant to the provisions of section 1212(b)(3) and this subparagraph. More specifically, their operation permits the limited use of a long-term capital loss carried to the taxable year from a taxable year beginning before December 31, 1969, in full on a dollar-for-dollar basis in computing the transitional additional allowance deductible for the taxable year. These rules have no application to, or effect upon, a determination of the character or amount of capital gain net income (net capital gain for taxable years beginning before January 1, 1977) reportable in the taxable year. See paragraph (b)(1) of this section and § 1.1212-1 for the determination of the amount and character of capital gains and losses reportable in the taxable year. Further, except to the extent that their application may affect the amount of the transitional additional allowance deductible for the taxable year and thus the amount to be treated as short-term capital loss for carryover purposes under section 1212(b) and § 1.1212-1(b)(2), these rules have no effect upon a determination of the character or amount of capital losses carried to or from the taxable year pursuant to section 1212(b) and § 1.1212-1(b).
(4) Order of application of capital losses to additional allowance or transitional additional allowance. In applying the excess of the net short-term capital loss over the net long-term capital gain and the excess of the net long-term capital loss over the net short-term capital gain to the additional allowance or transitional additional allowance deductible under section 1211(b) and this paragraph, such excesses shall, subject to the limitations of subparagraph (2) or (3) of this paragraph, be used in the following order:
82 Citing Cases
He further contends that he was entitled to exclude the entirety of his gain from the Hull Served 02/23/26 2 [*2] Property sale under section 1211 because it had been his principal residence for more than two years.
income. See id. Ordinary losses, on the other hand, are subject to no such limitation. Cf. Vines v. Commissioner, 126 T.C. 279, 288 (2006) (explaining that ordinary losses can offset ordinary income, while capital losses are subject to the limits of section 1211). And taxpayers may deduct ordinary losses against capital gain as well as ordinary income. Thus, characterizing losses as ordinary often leads to more favorable outcomes for taxpayers—the same favorable outcomes that are available for o
The effect ofdisallowing petitioner's capital losses was thus to prevent them from being carried to another year. See sec. 1212. - 4 - [*4] granted both motions. Thus, the only tax liability currentlybefore us is Amnesty National's corporate income tax liability for 2014. On January 17, 2018, respondent sent petitioner a letter informal
Capital Gains Issues Section 1211 provides that noncorporate taxpayers may deduct capital losses to the extent ofcapital gains plus $3,000.
334 (1981); see also Console v.
ich is includible in gross income." Petitioners argue that this penalty does not apply because their distribution falls within the exception set forth in section 72(q)(2)(C) for distributions "attributable to the taxpayer's becoming disabled within the meaning ofsubsection (m)(7)." Section 72(m)(7) provides that a person shall be considered "disabled" ifhe or she is: 6(...continued) position.
Although Distinct (1) credited the payments to petitioners as interest ! payments in its general ledger, (2) claimed interest expense deductions for the payments o 1 its 2010 tax return, and (3) indicated in the memo line ofeach check that the pay ent was "interest", and further, although Mrs. Friedman served as treasurer and vice presid
Pursuant to section 1211, noncorporate taxpayers are permittedto - 21 - [*21] deduct losses on the sale or exchange ofcapital assets to the extent ofthe gain from such sales or exchanges, plus the lower of: (1) $3,000 ($1,500 in the case ofa married individual filing separately) or (2) the excess ofsuch losses over such g
et loss (25,784) (11,883) In connection with these adjustments, the Heinbockels also concede that the capital loss of$85,294 claimed on Schedule D entitled "First Wilshire" shotild really be a capital loss of$25,000 for their investment in "DM Video Stock" that is unrelated to the lending activities (and also concede that the $25,000 is subject to section 1211's capital-loss limitation of$3,000 per year).
1211(a). Although by its terms section 1211 does not apply to gain or loss resulting from a disposition that is not a "sale or exchange", see, e.g., Helvering v.
et loss (25,784) (11,883) In connection with these adjustments, the Heinbockels also concede that the capital loss of$85,294 claimed on Schedule D entitled "First Wilshire" shotild really be a capital loss of$25,000 for their investment in "DM Video Stock" that is unrelated to the lending activities (and also concede that the $25,000 is subject to section 1211's capital-loss limitation of$3,000 per year).
Although by its terms section 1211 does not apply to gain or loss resulting from a disposition that is not a “sale or exchange”, see, e.g., Helvering v.
In the latter event, the [loss on the] loan is subject to the limitations of Section 1211 of the Internal Revenue Code.
In the latter event, the [loss on the] loan is subject to the limitations of Section 1211 of the Internal Revenue Code.
Long-Term Capital Los s Section 1211 provides that in the case of noncorporate taxpayers, capital losses are deductible only to the extent of capital gains plus $3,000 .' When capital losses exceedlcapital gains by more than,$3,000, the excess may be carried over to later taxable years to reduce capital gains or a limited amount of ordinary in
provides that if' the property sold' was -owned and` used by,-the., ' principal 'residence :for at least 2 .
This income will then be treated as ordinary income, irrespective of the rather inclusive notion of what qualifies as a capital asset, -7- since the surrender of the policy is not deemed as a "sale or exchange" as required for capital assets under section 1211 . Accordingly, we cannot accept petitioners' reasoning that, as a capital asset, the proceeds from the Northwestern Mutual distribution should be excluded from their gross income . Third, and finally, petitioners argue that had they known
Section 1211 (b) places limitations on the allowability of capital losses for individuals as follows : SEC . 1211 (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
This Court has never addressed whether the capital loss limitations of sections 1211 and 1212 apply for purposes of calculating a taxpayer’s AMTI. However, section 1.55-1(a), Income Tax Regs., states: Except as otherwise provided by statute, regulations, or other published guidance issued by the Commissioner, all Internal Revenue Code provisions that apply in determining the regular taxable income of a taxpayer also apply in determining the alternative minimum taxable income of the taxpayer. We
Court of Appeals for the Fifth Circuit, the Court recently rejected the argument that the capital loss limitations of sections 1211 and 1212 do not apply for purposes of calculating a taxpayer's AMTI . In so holding, we cited section 1 .55-1(a), Income Tax Regs ., which states in pertinent part that, except as otherwise provided : "[A)11 Internal Revenue Code provisions that apply in determining the regular taxable income of a taxpayer also apply in determining the alternative minimum taxable in
Whether petitioner may carry back capital losses pursuant to section 1211 to reduce the amount of his alternative minimum taxable income (AMTI) for 2000.
After concessions,2 the issues for decision are : 1) Whether the capital loss limitations of section 1211 apply to the computation of alternative minimum taxable income (ANTI) ; (2) whether alternative minimum tax (AMT) capital losses incurred in 2001 and 2002 can be carried back as an alternative tax net operating loss (ATNOL) to reduce ANTI in 1999, 2000, and 2001 ; and; (3) whether petitioner is liable for accuracy-related penalties und
”. The effect of the capital loss limitations of secs. 1211(b) and 1212(b) for regular tax purposes is not in issue and, thus, is not discussed in detail. Petitioner argues that because the instructions to line 9 of Form 6251 for 2000 do not mention sec. 1211, the instructions indicate that sec. 1211 does not apply for purposes of calculating petitioner’s AMTI. We do not need to consider whether petitioner’s interpretation of the instructions is correct. It is settled law that taxpayers cannot r
Petitioners contend that for AMT purposes (1) capital losses are not subject to the $3,000 limitation imposed under section 1211, and (2) imposing a $3,000 limitation on the amount of capital losses petitioners may report would defeat Congress’s intent to tax only the economic gain received by a taxpayer.
Subject to the limitations of section 1211, taxpayers can carry forward their capital losses to succeeding taxable years.
Thus, for example, for [alternative] minimum tax purposes it was intended that section 1211 (limiting capital losses) be computed using [alternative) minimum tax basis, that section 263A (requiring the capitalization of certain depreciation deductions to inventory) apply with regard· to [alternative] minimum tax depreciation deductions, and that section 265 (relating to expenses of earning tax-exempt income) apply with regard
We now decide whether petitioner is liable for the additions to tax pursuant to section 6651(a)(1). Section 6651(a)(1) imposes an addition to tax for failure to file a Federal income tax return by its due date, unless the taxpayer establishes that - 6 - the failure was due to reasonable cause and not willful neglect. “Reasonable cause”
Thus, for example, for [alternative] minimum tax purposes it was intended.that section 1211 (limiting capital losses) be computed using [alternative] minimum tax basis, that section 263A (requiring the capitalization of certain depreciation deductions to inventory) apply with regard to [alternative] minimum tax depreciation deductions, and that section 265 (relating to expenses of earning tax-exempt income) apply with regard
Thus, for example, for [alternative] minimum tax purposes it was intended that section 1211 (limiting capital losses) be computed using [alternative] minimum tax basis, that section 263A (requiring the capitalization of certain depreciation deductions to inventory).apply with regard· to [alternative] minimum tax depreciation deductions, and that section 265 (relating to expenses of earning tax-exempt income) apply with regard
300. The Senate report accompanying this legislation stated: That the provisions of the law requiring withholding at the source of the tax due on profits or incomes of resident taxable persons be repealed and instead there be substituted “information at the source,” where the amount of income received in any taxable year and pai
Respondent ultimately contends that the advances were contributions to capital made to further petitioner’s sole shareholder’s control of and investment in UPE, the loss of which is a capital loss deductible only to the extent of capital gains under section 1211. 1 Unless otherwise stated, all section references are to the Internal Revenue Code in effect for the taxable year remaining in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure. - 3 - FINDINGS OF FACT2
Section 165(f) states that losses from sales or exchanges of capital assets shall be allowed only to the extent allowed in section 1211 and 1212, which set forth limitations on capital losses.
Nonbusiness bad debts are treated as short term capital losses and are subject to the section 1211 limitations on capital losses.
o a related corporation are deductible as ordinary losses under section 165.2 1 Respondent concedes that petitioners’ losses from the advances at issue are long-term capital losses that are deductible under sec. 165(f), subject to the limitations of sec. 1211. Petitioners have failed to address, either at trial or on brief, respondent’s assertion of sec. 6662 accuracy-related penalties. We treat their failure to argue as, in effect, a concession of this issue. See Rule 151(e)(4) and (5); Sundstr
Under section 1212 any net capital losses that are disallowed as a result of the limitation in section 1211 may be carried forward to the next taxable year.
465, 483 (1988), "The touchstone for sale or exchange treatment is consideration." Therefore, if property merely becomes worthless, the loss does not arise from a sale or exchange within the meaning of section 1211, and is thus ordinary in character.
- 16 - and that the taxpayer's primary purpose for engaging in the activity must be for income or profit. Commissioner v. Groetzinger, 480 U.S. 23, 35 (1987). We have found that petitioner charged Murray less than the fair market value to rent her property. Benefiting a related party with a below-market rental agreement is evidence of t
Respondent challenges only the character of the losses. Petitioner argues that the losses are ordinary under several alternative theories. Respondent asserts that the losses are capital and, therefore, subject to the capital loss limitation rules of section 1211. I. Section 1244--Losses on Small Business Stock Petitioner's first argument is that he is entitled to a section 1244 stock loss in the amount of $83,9893 as originally claimed on his return. Respondent disallowed petitioner's section 12
Capital Loss for 1991 Under section 1211 a taxpayer other than a corporation is limited to $3,000 in net capital losses in any given tax year.
in the course of a transaction entered into by the guarantor for profit, and not in the course of his or her trade or business, the bad debt is a short-term capital loss realized when paid, and the recognition of it is subject to the limitations of section 1211. See Weber v. Commissioner, T.C. Memo. 1994-341; Smartt v. Commissioner, T.C. Memo. 1993-65; Brooks v. Commissioner, T.C. Memo. 1990-259; sec. 1.166-9(b), Income Tax Regs. A guarantor is entitled to a business bad debt deduction for a gu
he taxable year. Section 166(d), however, distinguishes business bad debts from nonbusiness bad debts. Nonbusiness bad debts may be deducted in the same manner as short-term capital losses, subject to the limitations on capital losses as provided in section 1211. Sec. 166(d); sec. 1.166-5(a), Income Tax Regs. Nonbusiness bad debt means a debt other than a debt created or acquired in connection with a trade or business of the taxpayer or a debt the loss from the worthlessness of which is incurred
at the losses on securities and futures transactions claimed by petitioners on Schedule C of their Federal income tax returns were reportable on Schedule D, and calculated petitioners' deduction for net capital losses subject to the limitation under section 1211. Petitioners contend that their losses incurred during 1989 and 1990 were reportable on Schedule C because petitioner functioned as a dealer due to the frequency of transactions, the large dollar volume, the extensive time devoted, and t
pra at 286. Thus, we sustain the disallowance by respondent of petitioners' bad debt deduction in the amount of $250,000. Petitioners are entitled, as respondent concedes, to a capital loss in the amount of $205,522.72, subject to the limitations of section 1211. Our conclusion moots the question whether, had we found that the guarantee and its payment gave rise to a bona fide indebtedness and did not constitute a contribution to capital, the bad debt would have been a business rather than a non
Subject to the limitations of section 1211,5 taxpayers can carry forward their 4Based on the record before us, we also question whether petitioners were even shareholders of Vosburg in 1988.