If you're a small business owner, consider ditching worthless equipment or property rather than selling it for a nominal loss — the IRS allows for taking an ordinary loss on your annual return rather than a capital loss. "Ordinary losses are losses from activities that the taxpayer actively engages in, such as starting a business, versus capital losses, which are generated from passive investments such as purchasing land hoping it will increase in value," Birrell says. "From a tax perspective, ordinary losses are always preferred because they can be used to offset ordinary income, which is taxed at much higher rates. Capital losses can only be used to offset capital gains, which are taxed at a max rate of 20%."