After selling an inherited land, if a person's basis turns out to be greater than the sale price, then his capital gain would be negative. Can this offset income earned from interest during the same year?

The capital loss CAN offset other income (to include interest) up to $3,000. If the loss is greater than $3,000 and there are no capital gains, the amount in excess of $3,000 is carried forward to future years, to be used in $3,000 increments until the loss amount is reduced to zero, or until the taxpayer dies, whichever comes first.

I have a client who received stocks in a divorce settlement which tanked in a major way when the .com bubble burst. Her total losses exceeded $250,000, and since she does NOT trade stocks, she writes off $3,000 every year on her return. At that rate, it will take about 70 years for her to use up the total loss.

I would point out that unless the land that was sold was used for business (i.e. rented out) then the loss on the land can't be written off, since you can't report losses on personal property.

ebaines is correct; I failed to notice that the capital asset in question was personal property real estate.