This Monday, Dec. 24, is the final day for tax-loss selling to ensure any loss from the sale of securities will settle in 2012 and therefore be available to be used immediately, as opposed to waiting until 2013.
Capital losses, of course, are quite restrictive in that they can only be used to offset capital gains, first in the current year, and if there is any excess, either in the prior three calendar years or in any future year.
But what if you could argue your market losses were not capital losses but rather part of regular trading activity which constituted an “adventure in the nature of trade” or, in plain language, a business. In that case, these “businesses losses” could be deducted against all sources of income, including employment income, rather than the restrictive rules for capital losses. (Of course, that also means any gains would be fully, instead of half, taxable.)
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