Separate tax bases
The rule under which results from different kinds of transactions are counted in separate baskets: a loss in one does not always reduce a profit in another.
How to read the number
The practical consequence: a good year in one instrument and a bad one in another do not necessarily net to nothing — offsetting works only within the permitted combinations.
When the metric lies
Dividends stand apart: tax withheld on them is not reduced by losses on trades in securities. The composition of the baskets and the rules for combining them are set by the tax code and change with the law.
Also known as: tax baskets