Section 3: 5–15%R10

Capital Gains and Losses

Exam insight

The netting process and the $3,000 individual loss limit come up constantly on REG. Mixing up the individual rules with the corporate rules is the most common capital-gains mistake.

What AICPA wants you to know

1Identify capital assets by exclusion
2Apply the holding-period rule to classify gains as short- or long-term
3Perform the short-term/long-term netting process
4Apply the $3,000 individual capital loss limitation and indefinite carryforward
5Contrast the individual and corporate capital loss rules
6Apply the wash-sale and related-party loss disallowance rules

Patterns in this topic

The exam re-skins the same archetypes. Recognize these here, then drill them in the Pattern Lab.

The Gain Character CallCompute the gain, then character it: capital, ordinary, or section 1231, with recapture peeling off the ordinary slice first.

Exam tip

Study smarter: before you expand each card, cover the screen and try to recall what the concept means from its title alone. Retrieving it from memory builds the recall the exam actually tests, and it beats re-reading.