Legal Definitions - main pot

Definition: The main pot is a term used in tax evaluation to determine whether a net gain or loss has occurred by comparing qualified transactions. It is also known as big pot, hotchpot, or hodgepodge. This process is governed by IRC (26 USCA) § 1231.

Example: Let's say a person sells two properties in a year. Property A was sold for a profit of $50,000, and Property B was sold for a loss of $20,000. In this case, the main pot would be calculated by subtracting the loss from the profit, resulting in a net gain of $30,000.

The example illustrates how the main pot is used to determine the tax liability of an individual by comparing the gains and losses from qualified transactions.