The tax treatment of capital losses and net operating losses (NOL) differs.

When you sell a capital asset, like stocks, bonds, or real estate, for less than its purchase price, it is known as capital loss. Capital losses can offset capital gains, and if losses exceed gains, individuals can deduct up to $3,000 per year against ordinary income, with any remaining loss carried forward to future years.

When a business's deductions exceed its taxable income for the year, it is called net operating loss (NOL). NOLs have the capacity to offset future taxable income indefinitely, but are limited to 80% of taxable income in a given year, unlike capital losses.