Capital Losses on Sale of Investments – A Lesson on Facebook’s IPO

Did you or do you know someone who purchase Facebook’s IPO (FB) at $38/share?  The stock closed down toeqy below $29/share today a decline of 23.6% from it’s IPO debut.  If you sold the stock this year, it would a short-term capital loss.   Capital losses are defined two ways–Short-term and Long-term.

Short-term capital gain/losses are gain/losses on investments held for less than one year.

Long-term capital gain/losses are gain/losses on investments held for one year or longer.

 Depending on how many shares you purchased and sold, Scheduel D only allows for $3,000 in capital loss to be used a year.  Any capital gain/ losses over $3,000 are carried to future years until the carryover is used up.  The short-term capital capita gain loss carryover is used to offset short-term gains while the long-term capital gain loss carryover is used to offset long-term capital gain. 

For Example if you brought a 1,000 shares of Facebook’s IP at $38 a share and sold them today you would have a short-term capital loss in the amount of $9,160

Purchased Price – 38,000

Sell Price –               28,840

Loss –                       (9,160)

It would take over three years to use the capital loss carryover.

So did you buy the Facebook IPO?  If so, have you sold the stock yet or are you waiting to see if the stock recovers?


“We are required by IRS Circular 230 to inform you that the advice contained herein (including all attachments) was not intended or written to be used for the purpose of avoiding any penalties that may be imposed under Federal tax law and cannot be used by you or any other taxpayer for the purpose of avoiding such penalties.”

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