ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -In simple terms, the difference between the selling price and cost/purchase price of an investment can be described as capital gain/loss. If the selling price is higher than cost price, it results in a capital gain and when the selling price is lower than the cost price, it leads to capital loss.

Detailed explanation-2: -A capital loss is a loss incurred when a capital asset is sold for less than the price it was purchased for. In regards to taxes, capital gains can be offset by capital losses, reducing taxable income by the amount of the capital loss. Capital gains and capital losses are reported on Form 8949.

Detailed explanation-3: -You have a capital loss if you sell the asset for less than your adjusted basis. Losses from the sale of personal-use property, such as your home or car, aren’t tax deductible.

Detailed explanation-4: -This is also commonly known as a net operating loss. It is a loss generally realized from carrying on a business. A non-capital loss (NCL) is distinct from a capital loss in that it can be deducted against any source of income. An NCL is fully deductible in the taxation year the loss occurred.

Detailed explanation-5: -There are three types of capital losses-realized losses, unrealized losses, and recognizable losses. Capital losses make it possible for investors to recoup at least part of their losses on their tax returns by offsetting capital gains and other forms of income.