If anyone understands the reasoning behind the US capping your deductible net capital loss in any tax year at $3,000 vs allowing your full capital losses to be offset I'd be interested.
Idea is to prevent people from offsetting large incomes with capital losses. This simply appears unfair to many - earning lots of income but paying little tax.
A more sophisticated argument is that since you can control capital losses by choosing which assets to sell you would be able to manage your taxes. With enough assets and some planning you could never pay taxes despite having a large income.
The $3,000 cap prevents this. Similar approaches are used throughout the tax code to prevent abuses.
One big reason is to push "people" that are basically engaging in a trade or business in to being a formal business, and taking the losses as business losses.
A more sophisticated argument is that since you can control capital losses by choosing which assets to sell you would be able to manage your taxes. With enough assets and some planning you could never pay taxes despite having a large income.
The $3,000 cap prevents this. Similar approaches are used throughout the tax code to prevent abuses.