So lets say you work for Walmart have no dependents and made $40,000 dollars in 2014. And lets say during that year between January 1st and December 31st you made only two investments (to keep things simple) both of which were short-term. Lets say you purchased stock in MSFT and sold it 3 days after purchasing it resulting in a gain of $500. Then lets say later in the year you purchased stock in GM and sold it 2 days after purchasing it resulting in a loss of $300. As I understand it since your income from work was $40,000 you would fall into the 25% bracket.

But here is my question. How much would you owe in taxes from these two short term sales. Would you owe 0.25*(500)=$125 in taxes such that the $300 loss wouldn't be counted. Or would you owe 0.25*(500-300)=$50.

As an addendum to this question imagine instead you gained $15000 for the MSFT sale and lost $60 for the GM sale. Would you owe 0.25*(15000)=$3750 or 0.25*(15000-60)=$3735. I just added this because I read about the $3000 deduction maximum and wasn't sure how it works.