Must I take $3,000 of capital losses?

Discussion in 'Tax' started by ted, Oct 26, 2009.

  1. ted

    ted Guest

    I understand I can take $3,000 worth of carried forward capital losses
    against ordinary income, but do I have to?

    TaxCut just does it without asking, so I presume it is required, but TaxCut
    could be wrong. Thanks.

    --
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    ted, Oct 26, 2009
    #1
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  2. In article <hc4a54$ku2$-september.org>,
    ted <> wrote:
    >I understand I can take $3,000 worth of carried forward capital losses
    >against ordinary income, but do I have to?
    >
    >TaxCut just does it without asking, so I presume it is required, but TaxCut
    >could be wrong. Thanks.



    TaxCut seems to be right.


    If you have a capital loss carryover, you must fill out the capital
    loss carryover worksheet and carry over the calculated amount to your
    schedule D, where it will reduce your capital gains/loss up to a
    maximum of 3000. But if your income is very low, even though it might
    appear to reduce your carryover and use up some of your carryover loss,
    it might not. That's where the worksheet comes in.
    --

    ArtKamlet at a o l dot c o m Columbus OH K2PZH

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2007) - All rights reserved. >>
    << ------------------------------------------------------- >>
     
    Arthur Kamlet, Oct 26, 2009
    #2
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  3. ted

    HLunsford Guest

    ted wrote:
    > I understand I can take $3,000 worth of carried forward capital losses
    > against ordinary income, but do I have to?
    >
    > TaxCut just does it without asking, so I presume it is required, but TaxCut
    > could be wrong. Thanks.
    >

    Curious, but just why would you not want take a deduction of $3,000
    against other income? It would lower your tax, you know.

    ChEAr$,
    Harlan Lunsford, EA n LA

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2007) - All rights reserved. >>
    << ------------------------------------------------------- >>
     
    HLunsford, Oct 26, 2009
    #3
  4. ted

    D. Stussy Guest

    "ted" <> wrote in message
    news:hc4a54$ku2$-september.org...
    > I understand I can take $3,000 worth of carried forward capital losses
    > against ordinary income, but do I have to?
    >
    > TaxCut just does it without asking, so I presume it is required, but

    TaxCut
    > could be wrong. Thanks.


    You do not have any discretion under the law not to take them. There is no
    election here.

    Just as there's no election that allows you to ignore income (unless
    specifically exempted by statute).

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2007) - All rights reserved. >>
    << ------------------------------------------------------- >>
     
    D. Stussy, Oct 26, 2009
    #4
  5. ted

    ted Guest

    "HLunsford" <> wrote in message
    news:hc4sdm$tv1$-september.org...
    > ted wrote:
    >> I understand I can take $3,000 worth of carried forward capital losses
    >> against ordinary income, but do I have to?
    >>
    >> TaxCut just does it without asking, so I presume it is required, but
    >> TaxCut could be wrong. Thanks.

    > Curious, but just why would you not want take a deduction of $3,000
    > against other income? It would lower your tax, you know.
    >

    I have way more deductions already to lower my income to zero; this is
    completely wasted. It would be nice to save it for a year in which I could
    use it. Should there ever be such a year...

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2007) - All rights reserved. >>
    << ------------------------------------------------------- >>
     
    ted, Oct 26, 2009
    #5
  6. ted

    Guest

    On Oct 26, 3:09 pm, "ted" <> wrote:
    > "HLunsford" <> wrote in message
    >
    > >> I understand I can take $3,000 worth of carried forward capital losses
    > >> against ordinary income, but do I have to?

    >
    > >> TaxCut just does it without asking, so I presume it is required, but
    > >> TaxCut could be wrong.  Thanks.

    > > Curious, but just why would you not want take a deduction of $3,000
    > > against other income?  It would lower your tax, you know.

    >
    > I have way more deductions already to lower my income to zero; this is
    > completely wasted.  It would be nice to save it for a year in which I could
    > use it.  Should there ever be such a year...


    Follow the capital loss carryover worksheet mentioned by Art.

    An example:

    Suppose on last year's return you had a net long term loss of 5k. And
    suppose for last year your AGI was 20k, and your itemized deductions
    were 27k.

    http://www.completetax.com/taxguide/tools/downloads/caploss.pdf

    line1=-7000 (income after itemized deduction, but before exemption)
    line3=line1-line2=-7000
    line4=3000 (loss as a positive number)
    line5=line3+line4=-4000
    line6=-4000 (smaller of line4, line5)
    line11=5000 (long term loss as a positive number)
    line12=0 (short term gain)
    line13=0 (line6-line7, but not less than zero)
    line14=line12+line13=0
    line15=line11-line14=5000

    Your capital loss carryover is the full 5k, not 2k.

    Now suppose your AGI is 26k.

    line1=-1000 (income after itemized deduction, but before exemption)
    line3=line1-line2=-1000
    line4=3000 (loss as a positive number)
    line5=line3+line4=+2000
    line6=+2000 (smaller of line4, line5)
    line11=5000 (long term loss as a positive number)
    line12=0 (short term gain)
    line13=2000 (line6-line7, but not less than zero)
    line14=line12+line13=2000
    line15=line11-line14=3000

    The capital loss carryover is 3k, as if only 2k were used up in the
    previous year.

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2007) - All rights reserved. >>
    << ------------------------------------------------------- >>
     
    , Oct 26, 2009
    #6
  7. ted

    D. Stussy Guest

    "ted" <> wrote in message
    news:hc552i$msl$-september.org...
    > "HLunsford" <> wrote in message
    > news:hc4sdm$tv1$-september.org...
    > > ted wrote:
    > >> I understand I can take $3,000 worth of carried forward capital losses
    > >> against ordinary income, but do I have to?
    > >>
    > >> TaxCut just does it without asking, so I presume it is required, but
    > >> TaxCut could be wrong. Thanks.

    > > Curious, but just why would you not want take a deduction of $3,000
    > > against other income? It would lower your tax, you know.
    > >

    > I have way more deductions already to lower my income to zero; this is
    > completely wasted. It would be nice to save it for a year in which I

    could
    > use it. Should there ever be such a year...


    You don't lose it. Look at the carryforward worksheet.

    You should also check if you have a net operating loss.

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2007) - All rights reserved. >>
    << ------------------------------------------------------- >>
     
    D. Stussy, Oct 27, 2009
    #7
  8. ted

    ted Guest

    "D. Stussy" <> wrote in message
    news:hc61h5$pm1$...
    > "ted" <> wrote in message
    > news:hc552i$msl$-september.org...
    >> "HLunsford" <> wrote in message
    >> news:hc4sdm$tv1$-september.org...
    >> > ted wrote:
    >> >> I understand I can take $3,000 worth of carried forward capital losses
    >> >> against ordinary income, but do I have to?
    >> >>
    >> >> TaxCut just does it without asking, so I presume it is required, but
    >> >> TaxCut could be wrong. Thanks.
    >> > Curious, but just why would you not want take a deduction of $3,000
    >> > against other income? It would lower your tax, you know.
    >> >

    >> I have way more deductions already to lower my income to zero; this is
    >> completely wasted. It would be nice to save it for a year in which I

    > could
    >> use it. Should there ever be such a year...

    >
    > You don't lose it. Look at the carryforward worksheet.
    >

    You're right! With a negative income it doesn't subtract the $3,000. I
    feel $600 richer.

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2007) - All rights reserved. >>
    << ------------------------------------------------------- >>
     
    ted, Oct 27, 2009
    #8
  9. ted

    HLunsford Guest

    ted wrote:
    >>

    > You're right! With a negative income it doesn't subtract the $3,000. I
    > feel $600 richer.
    >

    You see now? The government will take care of you.

    ChEAr$,
    Harlan Lunsford, EA n LA

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2007) - All rights reserved. >>
    << ------------------------------------------------------- >>
     
    HLunsford, Oct 27, 2009
    #9
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