carrying capital losses forward?


J

jack

As I understand it...
If I have $100,000 in capital losses this year I can apply $3,000 against
other income and carry $97,000 forward.
If I have a gain of $20,000 next year, I apply $20,000 against the gain,
$3,000 against other income, and carry $74,000 to the next year.

Is that about right?
Does it matter whether the $100,000 loss or the $20,000 gain are long or
short term?
 
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A

Arthur Kamlet

As I understand it...
If I have $100,000 in capital losses this year I can apply $3,000 against
other income and carry $97,000 forward.
If I have a gain of $20,000 next year, I apply $20,000 against the gain,
$3,000 against other income, and carry $74,000 to the next year.

Is that about right?

By George, I think you've got it!



Does it matter whether the $100,000 loss or the $20,000 gain are long or
short term?
The loss carry forward is allocated to short term and long term
(and could just be one of those) using the worksheet provided to
calculate the loss carryforward.

Then the short term gains and losses are combined. And the long term
gains and losses are combined. Then the net short term and net long
term figures are combined.


If the result is a loss, the maximum of 3000 loss goes to form 1040
line 13. There it reduces taxable income. Chances are the remaining
loss is carried forward.



But there are situations where the capital loss worksheet will
show you that the carryforward loss has not been reduced by the
full 3000 amount even though 3000 loss transferred to form 1040 line 13.


That happens, for example, when the itemized or standard deduction
exceeds adjusted gross income.
 
S

Stuart Bronstein

By George, I think you've got it!
Doesn't the gain over $3000 have to be a capital gain to be offset
against capital losses?

Stu
 
H

Harlan Lunsford

Stuart said:
Doesn't the gain over $3000 have to be a capital gain to be offset
against capital losses?
First, yes. Then on to page one of 1040.

ChEAr$,
Harlan
 
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A

Arthur Kamlet

Doesn't the gain over $3000 have to be a capital gain to be offset
against capital losses?

Sure. Assumed in my answer. Didn't you know what I was thinking :^)
 

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