Capital Loss Carry-over Question


M

M. B.

I would like to make sure that for Tax Year 2005 nothing has changed for the
following "hypothetical" stock capital gains situation.

I have $65,000 of short-term capital LOSS "carry-over" left from my previous
years. This year, I will have $25,000 short-term capital GAIN. This means
that for the Year 2006, I will have $37,000 left for carry-over ($65K - $25
= $40K - $3K (standard deduction) = $37K). Am I right?

Also, I received a check in the amount of $143 as part of a shareholder suit
settlement against one of the companies in which I held stock. Where on my
Federal Returns would I report this? I am self-employed, so I don't know
if this goes as "Misc Income" on my Schedule C.

I appreciate your help with these matters.

- Michael
 
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J

Jay

... I received a check in the amount of $143 as part of a
shareholder suit settlement against one of the companies in which I
held stock. Where on my Federal Returns would I report this...
I was in this situation a few years ago. I had already sold the stock. I
was advised to report it on Schedule D as a capital gain with zero basis.
The settlement arrived more than a year after the stock was originally
purchased, so it was long term. It's kind of like I should've paid less for
the stock than I did, and the settlement corrected that.

If you still own the shares, maybe all you need to do is adjust the basis.

(Disclaimer: I'm not a tax pro, just somebody who's been there.)
 
M

M. B.

Thanks for the reply.

To futher address the $143 check issue:
Also, I received a check in the amount of $143 as part of a
shareholder suit settlement against one of the companies in
which I held stock. Where on my Federal Returns would I
report this? I am self-employed, so I don't know if this
goes as "Misc Income" on my Schedule C.
#1 - my profession is Entertainer, so I am not a professional stock trader.
#2 - the security is now worthless (has been for 2+ years)
#3 - What would I put down as the dates of purchase / sale for this
secturiy,
which I no longer own since 2002. Wouldnt it now go down as LONG TERM
capital gain if I put in the day of purchase in 2002 and day of sale as the
day my check was made out (October 2, 2005)?
 
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K

Kathryn Morgan

Let me throw another monkey wrench into the pile. Was the $143 from a stock
that is included in the capital loss carryover? If so you must put the
basis down as 0 and the sales price as the $143, wiping out the portion of
the long term capital loss you have been carrying over. As for the dates, I
would do the purchase date and sale date from the dates in the settlement
from the class action suit. Make sure you clearly identify they reason on
the schedule D by including an attachment explanation.

--
Kathy Morgan EA
H & R Block Master Tax Advisor
Proud Mom of Sgt RT Morgan
1/156 AR BN C Company
Louisiana Army National Guard
Baghdad, Iraq
 

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