PENALTY-Capital loss carryover


T

TB

I have a question on incorrect capital loss carryover:

Suppose I have a capital loss carryover from last year of $10,000. I
have a gain this
year of $1000, and after claiming $3000, I should have a carryover of
<6000> to
next year.
I make a mistake and forget to claim another $1000 gain, which
only affects the
carryover to next year. Will the IRS penalize me if I get audited?? It
doesn't seem so
as I incurred no new tax because of the mistake.

Thanks, Tom B.
 
Ad

Advertisements

E

Ernie Klein

TB said:
I have a question on incorrect capital loss carryover:

Suppose I have a capital loss carryover from last year of $10,000. I
have a gain this
year of $1000, and after claiming $3000, I should have a carryover of
<6000> to
next year.
I make a mistake and forget to claim another $1000 gain, which
only affects the
carryover to next year. Will the IRS penalize me if I get audited?? It
doesn't seem so
as I incurred no new tax because of the mistake.
Probably not, but you should file an amended return right away (with a
corrected schedule D attached) before you do get audited - and you can
be sure that you will get audited but it could take a year or more.

If the capital gains was reported on a 1099 form, the IRS's computers
will eventually match that against your return and you will receive a
computer generated letter asking you to explain the difference (audit).
 
Ad

Advertisements

R

removeps-groups

Suppose I have a capital loss carryover from last year of $10,000. I
have a gain this
year of $1000, and after claiming $3000, I should have a carryover of
<6000> to
next year.
I make a mistake and forget to claim another $1000 gain, which
only affects the
carryover to next year. Will the IRS penalize me if I get audited?? It
doesn't seem so
as I incurred no new tax because of the mistake.
There won't be a penalty, because if you did get a CP2501 letter, you
would use up $1000 of the unclaimed capital loss carryover. However,
you should file an amended return (but no rush on it, meaning you can
take 3 months to do it) because:

(1) So your capital loss carryover to the following year is correct.
In reality your capital loss carryover to the next year is $5000 but
in your original return you have it as $6000. If in your 2008 tax
return you use up the $6000, then when you get the CP2501 letter for
your 2007 return, you will write back with an amended return claiming
an additional $1000 gain on Schedule D (which is what the CP2501
letter is for), but you will also use up an additional $1000 of your
capital loss carryover. But then on your 2008 return you might owe
interest because you claimed $6000 capital loss but should have
claimed $5000. So basically, get your accounting straight before the
end of 2008 just to save hassle down the road.

(2) So you don't have to deal with the CP2501.
 

Ask a Question

Want to reply to this thread or ask your own question?

You'll need to choose a username for the site, which only take a couple of moments. After that, you can post your question and our members will help you out.

Ask a Question

Similar Threads

USA Passive Loss Carryover 1
Capitalization of penalties in CWIP 2
capital loss carryover 9
Capital Loss Carryover 4
Capital Loss Carryover? 1
Capital Loss Carryover 4
capital loss carryovers 2
Capital Loss Carryovers 8

Top