Net losses in a tax year may be carried forward, but not offset against income.

For example, a loss from businesses and investments might offset wages before calculating the taxes due.

If there were never any capital gains, over eight years the entire loss could offset income of $24,000.

So that $24,000 loss would offset only $12,000 of ordinary income.

Usually, if a stock is sold at a loss, that loss will offset gains on other sales.

A loss of independent functions can also offset depression.

Philipp Brothers' losses have significantly offset gains in other divisions.

A loss can offset ordinary income up to $3,000; losses above that level can be carried forward to future years.

Net losses of up to $3,000 can offset ordinary income with any excess carried forward to future years.

So the losses on the short position largely offset the profit on the options trade.