Depends on the item. For example a car or a house also provides utility which is value extracted and not a loss. Most items should appreciate in line with inf

Depends on the item. For example a car or a house also provides utility which is value extracted and not a loss. Most items should appreciate in line with inflation, all else being equal - after all inflation doesn't change real values, just the digits used to express that value. And in this example if I sold it for $100 then no tax would be due at all under current schemes. In your case I still have paid $40 in taxes in addition to the losses from inflation.