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Title 26 — Internal Revenue CodeRelease 119-73

§1222 Other terms relating to capital gains and losses

Title 26 › Subtitle Subtitle A— - Income Taxes › Chapter CHAPTER 1— - NORMAL TAXES AND SURTAXES › Subchapter Subchapter P— - Capital Gains and Losses › Part PART III— - GENERAL RULES FOR DETERMINING CAPITAL GAINS AND LOSSES › § 1222

Last updated Apr 6, 2026|Official source

Summary

Defines different kinds of capital gains and losses and how to add them up for a taxable year. A short-term capital gain is profit from selling or trading a capital asset held for not more than 1 year, if it is counted in gross income. A short-term capital loss is a loss from such a sale or trade held not more than 1 year, if it is counted in taxable income. A long-term capital gain or loss is the same idea but for assets held for more than 1 year. Net short-term capital gain or loss is the short-term gains minus short-term losses for the taxable year (one will be the excess). Net long-term capital gain or loss is the long-term gains minus long-term losses for the taxable year. Capital gain net income is total gains from sales or exchanges of capital assets minus the losses from those sales or exchanges. Net capital loss is the excess of those losses over the amount allowed under section 1211 (for corporations, exclude amounts that are short-term capital losses under section 1212(a)(1) when working out this loss). Net capital gain is the net long-term capital gain minus the net short-term capital loss.

Full Legal Text

Title 26, §1222

Internal Revenue Code — Source: USLM XML via OLRC

For purposes of this subtitle—
(1)The term “short-term capital gain” means gain from the sale or exchange of a capital asset held for not more than 1 year, if and to the extent such gain is taken into account in computing gross income.
(2)The term “short-term capital loss” means loss from the sale or exchange of a capital asset held for not more than 1 year, if and to the extent that such loss is taken into account in computing taxable income.
(3)The term “long-term capital gain” means gain from the sale or exchange of a capital asset held for more than 1 year, if and to the extent such gain is taken into account in computing gross income.
(4)The term “long-term capital loss” means loss from the sale or exchange of a capital asset held for more than 1 year, if and to the extent that such loss is taken into account in computing taxable income.
(5)The term “net short-term capital gain” means the excess of short-term capital gains for the taxable year over the short-term capital losses for such year.
(6)The term “net short-term capital loss” means the excess of short-term capital losses for the taxable year over the short-term capital gains for such year.
(7)The term “net long-term capital gain” means the excess of long-term capital gains for the taxable year over the long-term capital losses for such year.
(8)The term “net long-term capital loss” means the excess of long-term capital losses for the taxable year over the long-term capital gains for such year.
(9)The term “capital gain net income” means the excess of the gains from sales or exchanges of capital assets over the losses from such sales or exchanges.
(10)The term “net capital loss” means the excess of the losses from sales or exchanges of capital assets over the sum allowed under section 1211. In the case of a corporation, for the purpose of determining losses under this paragraph, amounts which are short-term capital losses under section 1212(a)(1) shall be excluded.
(11)The term “net capital gain” means the excess of the net long-term capital gain for the taxable year over the net short-term capital loss for such year.

Legislative History

Notes & Related Subsidiaries

Editorial Notes

Amendments

2014—Pub. L. 113–295 struck out concluding provisions which read as follows: “For purposes of this subtitle, in the case of futures transactions in any commodity subject to the rules of a board of trade or commodity exchange, the length of the holding period taken into account under this section or under any other section amended by section 1402 of the Tax Reform Act of 1976 shall be determined without regard to the

Amendments

made by subsections (a) and (b) of such section 1402.” 2010—Par. (10). Pub. L. 111–325 substituted “section 1212(a)(1)” for “section 1212”. 1984—Pars. (1) to (4). Pub. L. 98–369 substituted “6 months” for “1 year”, applicable to property acquired after June 22, 1984, and before Jan. 1, 1988. See

Effective Date

of 1984 Amendment note below. 1976—Pars. (1) to (4). Pub. L. 94–455, § 1402(a)(2), provided that “9 months” would be changed to “1 year”. Pub. L. 94–455, § 1402(a)(1), provided that “6 months” would be changed to “9 months” for taxable years beginning in 1977. Par. (9). Pub. L. 94–455, § 1901(a)(136)(A), substituted “Capital gain net income” and “capital gain net income” for “Net capital gain” and “net capital gain” in heading and text. Par. (11). Pub. L. 94–455, § 1901(a)(136)(B), substituted “Net capital gain” and “net capital gain” for “Net section 1201 gain” and “net section 1201 gain” in heading and text. Pub. L. 94–455, § 1402(d), inserted sentence at end relating to length of holding period in case of futures transactions in commodities. 1969—Par. (9). Pub. L. 91–172, § 513(c), substituted “The” for “In the case of a corporation, the”. Par. (11). Pub. L. 91–172, § 511(a), added par. (11). 1964—Pars. (9), (10). Pub. L. 88–272 struck out provisions from par. (9) relating to taxpayers other than corporations, and inserted “In the case of a corporation” in par. (10).

Statutory Notes and Related Subsidiaries

Effective Date

of 2014 AmendmentAmendment by Pub. L. 113–295 effective Dec. 19, 2014, subject to a

Savings Provision

, see section 221(b) of Pub. L. 113–295, set out as a note under section 1 of this title.

Effective Date

of 2010 AmendmentExcept as otherwise provided, amendment by Pub. L. 111–325 applicable to net capital losses for taxable years beginning after Dec. 22, 2010, see section 101(c) of Pub. L. 111–325, set out as a note under section 1212 of this title.

Effective Date

of 1984 AmendmentAmendment by Pub. L. 98–369 applicable to property acquired after June 22, 1984, and before Jan. 1, 1988, see section 1001(e) of Pub. L. 98–369, set out as a note under section 166 of this title.

Effective Date

of 1976 Amendment Pub. L. 94–455, title XIV, § 1402(a)(1), Oct. 4, 1976, 90 Stat. 1731, provided that the amendment made by that section is effective with respect to taxable years beginning in 1977. Pub. L. 94–455, title XIV, § 1402(a)(2), Oct. 4, 1976, 90 Stat. 1731, provided that the amendment made by that section is effective with respect to taxable years beginning after Dec. 31, 1977. Amendment by section 1901(a)(136) of Pub. L. 94–455 applicable with respect to taxable years beginning after Dec. 31, 1976, see section 1901(d) of Pub. L. 94–455, set out as a note under section 2 of this title.

Effective Date

of 1969 AmendmentAmendment by section 511(a) of Pub. L. 91–172 applicable with respect to taxable years beginning after Dec. 31, 1969, see section 511(d) of Pub. L. 91–172, set out as an

Effective Date

note under section 852 of this title. Amendment by section 513(c) of Pub. L. 91–172 applicable to taxable years beginning after Dec. 31, 1969, see section 513(d) of Pub. L. 91–172, set out as a note under section 1211 of this title.

Effective Date

of 1964 AmendmentAmendment by Pub. L. 88–272 applicable to taxable years beginning after Dec. 31, 1963, see section 230(c) of Pub. L. 88–272, set out as a note under section 1212 of this title.

Reference

Citations & Metadata

Citation

26 U.S.C. § 1222

Title 26 — Internal Revenue Code

Last Updated

Apr 6, 2026

Release point: 119-73