Net capital gains allocated to a Partner for a taxable year are short term capital gains and are taxed as ordinary income. Net capital losses allocated to a Partner for a taxable year are short term capital losses and can be used to offset short term capital gains from other sources. If short term capital losses exceed short term capital gains a maximum deduction of $3,000 can be made against other income. Any remaining short term capital losses carry over to subsequent tax years until they are offset by short term capital gains.