capital loss carryover


G

ghanwani

TurboTax has 2 boxes for capital loss carryover -- one
for long term and one for short term. Why does it have
this? Aren't all carryovers long term?

On a related note, can long-term losses be used to offset
short-term gains?

Thanks,
Anoop
 
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A

Arthur Kamlet

TurboTax has 2 boxes for capital loss carryover -- one
for long term and one for short term. Why does it have
this? Aren't all carryovers long term?
Of course not.

You fill out the capital loss carryover worksheet to
calculate how much of your carryover loss is short term and
long term.

If you did not fill out your worksheet, how do you know
where to report the loss?
On a related note, can long-term losses be used to offset
short-term gains?
First step is to net short term losses and gains. And net
long term loses and gains.

Next step is to net short vs long term and get a net capital
gain or loss. So in this step, if your net long term
gain/loss is a loss, and if your net short term gain/loss is
a gain, you net them together.

That's the theory. The schedule D has it all worked out for
you, so if you never knew these rules, but you followed
line-by-line instructions printed right on the form, you'd
come out correct.

__
Art Kamlet ArtKamlet @ AOL.com Columbus OH K2PZH
 
T

Thomas Healy

TurboTax has 2 boxes for capital loss carryover -- one
for long term and one for short term. Why does it have
this? Aren't all carryovers long term?

On a related note, can long-term losses be used to offset
short-term gains?
History. Many years ago it made a difference; it might
again.
 
D

David Woods, EA, ChFC, CLU

TurboTax has 2 boxes for capital loss carryover -- one
for long term and one for short term. Why does it have
this? Aren't all carryovers long term?
Clearly they are not.
On a related note, can long-term losses be used to offset
short-term gains?
Yes.
 
R

Rick Merrill

... Aren't all carryovers long term? ...
Anoop,
The "term" refers to how long you owned the asset, not to
how long it has been since you sold it nor to how long you
have been 'carrying' the loss.
 
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D

David Woods, EA, ChFC, CLU

What's the rationale in separating them?
In the rare event I probe people's minds, I tend to avoid
those of politicians. Ugly things, those minds. In other
words, why does it matter?
 
R

Rich Carreiro

What's the rationale in separating them?
Because short-term gains and long-term gains
are taxed differently. Given that, you have
to separate long-term and short-term losses.
 
A

Arthur L. Rubin

On a related note, can long-term losses be used to offset
What's the rationale in separating them?
It used to be the case that long term losses were only
allowed against income at the same 50% as long term gains
were included in taxable income. I suppose it could happen
again.

Furthermore, as long term losses are netted against long
term gains and short term losses are netting against short
term gains before long term gains are netted against short
term losses, it may still make a difference which carryover
you have if you have a net capital gain in the carryover
year.
 
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D

D. Stussy

What's the rationale in separating them?
ST and LT gains are taxed at different rates. A loss first
offsets gains of its own term before it offsets a gain of
the other term.
 

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