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JBE, CPA
JBE, CPA, Certified Public Accountant (CPA)
Category: Tax
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Experience:  25 Years Experience
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Capital Loss Loophole

Customer Question

From 2004 and 2003, I had capital losses in excess of $3000 that I can't use to offset any capital gains. In 2004 my total income was less than my standard deduction plus my personal exemption combined, so I wouldn't need the $3000 carryover from line 21 of Schedule D. But the instructions say to enter the $3000 on Line 13 of the 1040, BEFORE subtracting the Standard Deduction and Personal Exemption, making the $3000 credit go to waste. I already know that this is in fact the correct procedure and result, but is there any loophole, trick, or manuever that can save the $3000 credit for next year?
Submitted: 11 years ago.
Category: Tax
Expert:  JBE, CPA replied 11 years ago.
Regrettably, there isn't any trick or loophole that will solve your problem. Capital losses are fully deductible against capital gains. As you know the capital loss is deductible against ordinary income of $3,000 before the standard deduction and personal exemption. Any excess capital losses can be carried forward.

JBE, CPA

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