In using this advantageous strategy, the private foundation (1) does not needlessly forgo the capital loss, because the loss offset the capital gain; (2) does not pay the 2% excise tax on the recognized capital gain (which it might have to pay if the asset were sold in a year when no capital losses
are available); and (3) now has an increased tax basis in the asset sold and repurchased (which will decrease future recognizable capital gain).
For book purposes, capital losses
are reported in the year incurred.
The Service will waive this ban if capital losses
and NOLs are either (1) $50,000 or less or (2) resulting from a short period of nine months or longer and are less than the loss for a full 12-month period beginning with the first day of the short period.
are particularly distasteful to corporations because (1) they can be used only to offset capital gains and (2) net capital losses
have a limited life.
Net income includes net realized capital losses
and other items, which are excluded from operating earnings
2002-37 applies the same terms and conditions applicable to a carryback of a net operating loss (NOL) generated in a short period under the prior procedure, to capital losses
generated in the short period.
Under this provision, losses on the sale or exchange of a small corporation's stock (section 1244 stock) may be deducted as ordinary losses rather than as capital losses
subject to the capital loss limits.
While risky assets, such as below investment grade bonds and mortgages, as a percentage of invested assets declined in 2004, Fitch views TIAA's investment strategy as incorporating greater than average credit risk, which has resulted in higher than expected realized credit-related capital losses
again in 2004.
This is much more favorable treatment than the limited deduction allowed for capital losses
AIG has determined that realized capital losses
with respect to certain impaired investments were not recorded in the appropriate period and the restatement will thus affect the timing of previously reported realized capital losses
, but will have no effect on consolidated shareholders' equity at December 31, 2004.
731 gain can be used to trigger passive losses as well as offset capital losses
The result of such consolidation is to recharacterize approximately $200 million of previously reported capital losses
as an equal amount of underwriting losses relating to auto warranty business from 2000 through 2003.