It is the other use of capital losses that would change.

If the market continues to decline, then you get capital losses."

Of course, investors with capital losses need not wait for legislative action in deciding what to do.

But capital losses are not distributed to shareholders for tax purposes.

Capital losses from prior years can be brought forward.

When doing so, he said, they should be sure to include any offsetting capital losses available to them at the time of sale.

That would be particularly easy now, he added, when most investors have unrealized capital losses.

Capital losses on homes are, and would continue to be, nondeductible under the President's proposal.

The treatment of capital losses continues as before.

Unused net capital losses carried forward by the deceased from past tax years are lost with their death.

Even if she should sell the rebuilt house for $200,000, capital losses on a personal residence are not deductible.

Those capital losses may have come from the sale of stock, limited partnerships, investment real estate or a business failure.

But capital losses cannot be deducted from ordinary income above a $3,000 annual limit.

Unprofitable and troubled businesses may result in capital losses for shareholders.

C corporations are not allowed to deduct capital losses against ordinary income.

That gave him capital losses to offset gains racked up in a number of other stocks.

But some well-to-do taxpayers could actually end up with a tax increase because of the way the Senate measure would treat capital losses.

That means an opportunity to buy funds holding large capital losses, he said, and to "ride up the hill tax-free."

Last year, for instance, Presidential reported "realized capital losses" of $5.9 million, or well under 1 percent of the company's total assets.

However, capital losses cannot be offset against income.

In almost all instances, tax on a second home sale can be reduced by charging off against the gain any capital losses suffered that year.

Much of the turnover in such funds reflects their managers' efforts to take short-term capital losses, which reduce taxes.

Capital losses for the years 2000 through 2003 will be shifted into underwriting losses.

Capital losses can be offset against capital gains arising in the same or later tax year.

Net capital losses in a tax year may be carried forward and offset against future capital gains.