How to treat gains and losses and offsetting?:confused:

Report all your capital gains or losses on schedule D (Form 1040). All these gain and loss figure are added to arrive at net gain or net loss figure.

Agreed; however, if you have a net LOSS you can also deduct up to $3,000 off OTHER income (like salary and wages) each year.

Any excess loss over $3,000 is carried forward to future years until it is used up or until you die, whichever comes first.

Okay, someone also needs to explain the difference between short term and long term capital gains and losses here also

If you keep stocks for more than a year, then the gain/loss on the sale is long term gain. If you sell stocks within one year of purchase, you have short term gain or loss. Short term gain is your ordinary income taxes at your regular tax rate. The tax rate for long term capital gain is 15% or 5% depending upon you tax bracket.

And explain how loss carryovers are applied to short and long term gains next year

A detailed explanation of these issues would take a significant amount of time and effort.

A better solution for Sau Heung is for him/her to get professional tax help on his/her return. The details are generally beyond the skills of the average taxpayer.