Capital Loss

Full explanation

A capital loss occurs when you sell an investment or asset for less than its cost basis. Capital losses first offset capital gains of the same type (short-term losses offset short-term gains, long-term losses offset long-term gains), then offset gains of the other type. If total losses exceed total gains, you can deduct up to $3,000 ($1,500 if married filing separately) of net capital losses against ordinary income per year. Excess losses carry forward indefinitely to future tax years. Wash sale rule: you cannot claim a loss if you buy a substantially identical security within 30 days before or after the sale.

Source: IRS Publication 550 — Investment Income and Expenses