Business and Personal Finance Dictionary

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• CAPITAL LOSS
  
  When you sell an asset for less than you paid for it, the difference between the two prices is your capital loss. For example, if you buy 100 shares of stock at $30 a share and sell when the price has dropped to $20 a share, you will realize a capital loss of $10 a share, or $1,000. Although nobody wants to lose money on an investment, there is a silver lining: You can use capital losses to offset capital gains in computing your income tax. And if you have a net capital loss in any year — that is, your losses are greater than your gains — you can usually deduct up to $3,000 of this amount from regular income on your tax return. You may also be able to deduct net capital losses above $3,000 on future tax returns.
  
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