This case involves whether taxpayers can offset realized long-term capital gains with negative taxable income before applying long-term capital loss carryovers. The Tax Court held that the taxpayers could not do this and must apply the capital loss carryover first based on the statutory language governing capital losses. The taxpayers had a $23,000 net long-term capital loss in 2002 that was carried over to 2003 and 2004. The Court determined the capital loss carryover to 2004 was $5,807, resulting in a $698 tax deficiency for 2004.