Ordinary loss,
Definition of Ordinary loss:
An ordinary loss is loss realized by a taxpayer when expenses exceed revenues in normal business operations. Ordinary losses are those losses incurred by a taxpayer which are not capital losses. An ordinary loss is fully deductible to offset income thereby reducing the tax owed by a taxpayer.
Ordinary losses may stem from many causes, including casualty and theft. When ordinary losses are more than a taxpayer's gross income during a tax year, they become deductible. Capital and ordinary are two tax rates applicable to specific asset sales and transactions. The tax rates are tied to a taxpayer’s marginal tax rate. Net long-term capital rates are significantly lower than ordinary rates. Hence the conventional wisdom that taxpayers prefer capital rates on gains and ordinary rates on losses. .
Loss incurred from the normal operations of a business.
How to use Ordinary loss in a sentence?
- An ordinary loss is realized by a taxpayer when expenses exceed revenues in normal business operations.
- An ordinary loss is fully deductible to offset income thereby reducing the tax owed by a taxpayer.
- Ordinary losses are separate from capital losses.
Meaning of Ordinary loss & Ordinary loss Definition