If a capital asset is sold at a loss, the holding period is important.

Question

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The holding period of a capital asset is important when calculating the amount of the loss that can be deducted for tax purposes. If the asset has been held for one year or less, the loss is classified as a short-term capital loss and can only be used to offset other short-term gains. However, if the asset has been held for more than one year, the loss is classified as a long-term capital loss and can be used to offset both short-term and long-term gains, and up to $3,000 in ordinary income each year.

If a Capital Asset Is Sold at a Loss, the Holding