Have a question about carryover short term vs long term capital loss


M

Michael B.

I finally took a loss with a penny stock that I held over
the last 7 years. So here is my "hypothetical" situation:

I will have a 30K long term capital LOSS showing on my 2007
return

I will have a 10K short term capital GAIN showing on my 2007
return

Will the -30K + 10K = to -20K cary over for next year?

Or is it not possible to offset any long term LOSS towards
any short term GAIN?

Thanks for the feedback...

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B

Bill

(e-mail address removed) (Michael=A0B.) posted:
I finally took a loss with a penny stock that I
held over the last 7 years. So here is my
"hypothetical" situation:
I will have a 30K long term capital LOSS
showing on my 2007 return
I will have a 10K short term capital GAIN
showing on my 2007 return
Will the -30K + 10K =3D to -20K cary over for
next year?
Or is it not possible to offset any long term
LOSS towards any short term GAIN?
You will find that, as the Schedule D reporting of capital
gains is worked through, there comes a point where you are
directed to _combine_ the results of the short- and
long-term sections. That _combining_ will result in your
long-term loss offsetting the smaller, short-term gain. The
remaining long-term loss will be carried forward (and you
should take care to make special note, so it is "remembered"
when the next year's return is prepared).

As the long-term loss carryover is worked down -- with at
least $3,000 useable each year, even against ordinary income
-- it may offset either/or short- and long-term gains. If,
however, at some point the loss carryover is _less_ than
either the long-term or the combined short- and long-term
gains, then it will be used _first_ to reduce the long-term
gain. Therefore, similar tax-advantaged income is the first
offset.

Bill

<< ------------------------------------------------------- >>
<< 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. >>
<< ------------------------------------------------------- >>
 
J

joetaxpayer

Michael said:
I finally took a loss with a penny stock that I held over
the last 7 years. So here is my "hypothetical" situation:

I will have a 30K long term capital LOSS showing on my 2007
return

I will have a 10K short term capital GAIN showing on my 2007
return

Will the -30K + 10K = to -20K cary over for next year?

Or is it not possible to offset any long term LOSS towards
any short term GAIN?
Close. If the above is all you have, the $20K loss is taken
as $3K against ordinary income (!) and $17K is carried
forward. The sequence is to first net long term losses again
long term gains, then short against stort, then netting what
remains as I did above.

The $17K loss, if you have no further gains will be used up
as $3K per year against ordinary income until it's used up.

JOE
www.blog.joetaxpayer.com

<< ------------------------------------------------------- >>
<< 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. >>
<< ------------------------------------------------------- >>
 
S

Seth

Michael B. said:
I finally took a loss with a penny stock that I held over
the last 7 years. So here is my "hypothetical" situation:

I will have a 30K long term capital LOSS showing on my 2007
return

I will have a 10K short term capital GAIN showing on my 2007
return

Will the -30K + 10K = to -20K cary over for next year?
You also get to use 3K against ordinary income this year, so
17K loss carries forward.

Seth

<< ------------------------------------------------------- >>
<< 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. >>
<< ------------------------------------------------------- >>
 
R

Rich Carreiro

Michael B. said:
I finally took a loss with a penny stock that I held over
the last 7 years. So here is my "hypothetical" situation:

I will have a 30K long term capital LOSS showing on my 2007
return

I will have a 10K short term capital GAIN showing on my 2007
return

Will the -30K + 10K = to -20K cary over for next year?
Almost. Those two will net to a $20K *long-term* loss. Then
$3K of that will be taken against your ordinary income (no
choice), leaving a $17K *long-term* carryover to next year.

--
Rich Carreiro (e-mail address removed)

<< ------------------------------------------------------- >>
<< 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. >>
<< ------------------------------------------------------- >>
 
E

ed

Michael B. said:
I finally took a loss with a penny stock that I held over
the last 7 years. So here is my "hypothetical" situation:

I will have a 30K long term capital LOSS showing on my 2007
return

I will have a 10K short term capital GAIN showing on my 2007
return

Will the -30K + 10K = to -20K cary over for next year?

Or is it not possible to offset any long term LOSS towards
any short term GAIN?
You must enter these transactions on Shedule D and take
$3,000 of the loss on 1040line 13. Then the remaining
$17,000 carries over on the Capital Loss Carryover
Worksheet. Yes, your long term loss will offset short term
gains if there are no other gains or losses involved.

ed

<< ------------------------------------------------------- >>
<< 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. >>
<< ------------------------------------------------------- >>
 
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M

Michael B.

Michael B. said:
I finally took a loss with a penny stock that I held over
the last 7 years. So here is my "hypothetical" situation:

I will have a 30K long term capital LOSS showing on my 2007
return

I will have a 10K short term capital GAIN showing on my 2007
return

Will the -30K + 10K = to -20K cary over for next year?

Or is it not possible to offset any long term LOSS towards
any short term GAIN?
Thank you all for the answers! Much appreciated!

<< ------------------------------------------------------- >>
<< 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. >>
<< ------------------------------------------------------- >>
 

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