I own a taxi company but besides that I sometimes make investments. Each month I check my earnings from my cab company and give tsedoko accordingly. Recently, I took a big loss on one of my investments. May I reduce my income by the amount of the loss and just give ma’aseir on the remaining gain, or must I give ma’aseir from my income and ignore the loss?
Your question is important because the poskim write that one should try to determine the exact amount that he should give as ma’aseir because there is something special about giving a tenth or two tenths. (See for example Ahavas Chessed 19 in the footnote. Recall that giving a tenth prevents one from becoming poor.) Thus, even if one gives more than a tenth, he should still try to determine how much he should give.
The difficulty that the poskim have with issues concerning ma’aseir from one’s income, ma’aseir kesofim, is that there is almost no discussion in the Gemara about the entire subject. Therefore, the poskim were forced to find comparisons in other areas of halacha. Concerning your question the poskim found two areas in halacha to which they compared ma’aseir kesofim and we follow both approaches.
Some poskim (Sha’ar Efraim 84, Chasam Sofer notes on YD 249) found an analogy in the laws of investments since the issue of losses offsetting gains is discussed in this context. The issue is where A invests money with B and makes an agreement that A will get a certain percent of the gains but suffer a different percent of the losses. If B makes two investments with A’s money and one profited and one lost money, the issue of losses offsetting gains comes up. If losses offset gains and there is a net gain, then A will just get his percent of the net gain and his percent of the losses is irrelevant. However, if they do not offset gains one must compute each investment separately using different percentages and A will receive the percent of his gain minus his percent of the loss.
The halacha (See YD 177, 33) is that if one investment agreement covers both investments then losses offset gains but if each investment is covered by a separate agreement then even if the two agreements are the same one must compute each investment separately.
These poskim rule that this principle should decide the issue when dealing with ma’aseir as well. The difficulty is that we don’t write agreements with Hashem concerning our investments. The poskim rule that computation defines the investments. When one makes a computation of his gains and losses for a certain period of time and determines how much money he must give as ma’aseir, he concludes one period and everything afterwards is computed separately. Therefore within one computation period losses offset gains whereas in two periods they do not.
The second approach found a different source for determining how to decide the issue in the case of ma’aseir kesofim. These poskim (Noda Biyehuda YD 2, 198, Knesses Hagedolo YD 249) compared ma’aseir on one’s income to ma’aseir that one must give on the produce of his field. Concerning the latter, the pasuk says that one may not tithe the crop of one year together with the crop of another year.
Thus, for example, if one has five fields where he grows wheat, he can gather all the wheat together and separate a tenth from the entire crop. The fact that the wheat grew in five different fields is irrelevant. However, one may not gather together the crop of two years, even from the same field, and tithe both together because each year is considered a separate unit. This is a common issue with quince because the new year for fruit begins at Tu Bishvat and this fruit begins growing right around Tu Bishvat. Farmers must be careful to tithe the quince that began growing before Tu Bishvat separately from those that began growing after Tu Bishvat.
The poskim who use this comparison rule that losses may be used to offset gains that were realized in the same year.
Since there is no proof that either opinion is incorrect and it is possible to satisfy both opinions, we act in a manner that is in accordance with both opinions. Thus, one should compute his gains and losses at least once a year and determine his net profit for the entire period and figure out a tenth and write down that that is the amount that he must give as ma’aseir for that period. If he gives one fifth then he should he should compute one tenth and give twice one tenth. (See the above referenced footnote of the Chafetz Chaim where he makes the point that one should separate a tenth two times and not lump the two tenths together as one fifth.)
If one makes his computation for less than an entire year, then one may only use losses to offset gains within that computation period even though the losses and gains took place in the same year because we act in accordance with the opinions that rule that the determining feature is just the computation period and not the entire year.
The Chavos Ya’er (224 in parenthesis) writes that one should make his computation before Rosh Hashana since the Gemara (Beitsa 16A) writes that Hashem decides on Rosh Hashana how much one will earn that year. Therefore, each Jewish year is considered a separate unit. Rav Shlomo Zalman Auerbach (Kol Hatorah 39, page 90) writes that it is not crucial when one makes his calculations but it should be at least once a year and should be a fixed day and not done haphazardly. The Shevet Halevi (Rav Wosner 9, 201, 5) and the Tsedoko U’mishpot (5, footnote 39) rule that one may use the secular calendar year which is often more convenient since one must compute gains and losses anyway in order to pay taxes. The Sha’arei Tseddek (9, footnote 52) is not so happy with this ruling because it is not in accordance with the Chavos Ya’ir since Hashem’s year for determining one’s income is Rosh Hashana and not the secular year. The Aruch Hashulchan (YD 249, 7) also writes that one should make his computation based on the Jewish year.
There is another reason that it may not always be a good idea to combine one’s ma’aseir computations with his tax computations and that is because the rules of the tax authorities are different from the Torah’s rules. Our issue is a case in point. Whereas for tax purposes one may carry over capital losses from one year to the next, under Torah law, one may not do so as we have seen.
Another related issue where the two differ, concerns what are considered profits. Whereas for tax purposes an individual who has a whole or partial interest in a small corporation does not need to pay personal income tax on profits that were earned by his corporation but were left with the corporation, when one computes his ma’aseir he must include these profits as personal earnings. (See the above citation from Rav Shlomo Zalman and the Kovetz Teshuvos of Rav Eliashev (2, 54)). Thus, when one takes out money from the corporation he should add to the amount an extra amount for the ma’aseir on the profits he is leaving in the corporation. Note that this does not include one who owns stock in a large company. Many leading poskim (including Iggros Moshe Even Ho’ezer 1, 7) rule that a shareholder is not considered an owner unless he has a real say in the company and only then is considered a partner in the company. (For an in-depth survey see Otsar Hamishpot Volume 2 pages 683-714.)
Another difference between Torah law and secular tax law concerns real estate where, while the tax authorities allow one to avoid paying taxes if the profits are “rolled-over” into another property, according to the above poskim for ma’aseir purposes one has to include in his ma’aseir calculation each deal that was done that year and he cannot wait until he takes out his money (if that ever happens).
Once one has computed how much money he was supposed to give that year for ma’aseir he has to compare that with the amount of tsedoko he gave during that period. If he gave more that he was required to, based on his ma’aseir calculation, he has a credit with his ma’aseir which he can carry over to the next year (Noda Biyehuda YD 1, 73 cited by Pischei Teshuva 249, 1 and ruled by Aruch Hashulchan 249, 7). If he gave less than the amount that he needs to give based on his ma’aseir calculation, he should set aside the amount he owes and distribute it to tsedoko causes. It is important to not say when setting aside the money that it is tsedoko money, but rather to set it aside and say that it will become tsedoko when it is actually distributed since otherwise one might violate the prohibition of lo se’acheir. (See Derech Emuna, Matnas Aniyim 8, footnote 72 in the name of the Chazon Ish.)
In conclusion: If you didn’t make a formal calculation each month and just looked at your profits in order to guide you how much to give, you may use your loss to offset your gains when you make your formal tsedoko calculations later in the year.