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Anne
Anne, Master Tax Preparer
Category: Tax
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I had a capital gain from short term stock trading in 2007

Customer Question

I had a capital gain from short term stock trading in 2007 of 700K and a capital loss from short term stock trading of 218K in 2008.Can i take my loss in 2008 and file an amended return.I will also have another loss of about 50K for 2009.I can qualify as a pro stock trader and want to file now[2008] for that application.
Can i then file amended returns now or should i wait until 2009 and carryback to 2007?If i file now[2008] do i go back to 2006?
Submitted: 4 years ago.
Category: Tax
Expert:  Anne replied 4 years ago.
HiCustomerbr />
Thank you for using justanswer. You can not carry a capital loss back to previous years. You may only claim up to the limit (3000 loss above your capital gains) and then rest is a carryforward. See below:

Tax Facts About Capital Gains and Losses

If you are now, as you say, a pro stock trader, then you will file this as a business on Form 1040 (Schedule C)Profit or Loss From Business. This will remove the $3000/year loss limitation, but will still not allow for any carryback of losses, unless you have a negative income as your AGI, which may mean you have a "Net Operating Loss"


If you were in any way considering this as a "Net operating loss" (which can be carried back to previous years) then this might be possible if you meet the qualifications for this to be viewed as a business instead of as investment property. (You can not have a net operating loss from investment, so this would have to be a business for any relief from a net operating loss) Please see below:


Tax Topics - Topic 429 Traders in Securities (Information for Form 1040 Filers)

Publication 536 (2008), Net Operating Losses (NOLs) for Individuals, Estates, and Trusts

Net Operating Losses may be carried back 2 years and forward 20 years, so if you meet the qualifications to file as a pro trader and you have a net operating loss, you will have to decide which 2 prior years you want relief for, starting with 2006 or 2007.

I hope this helps.
Anne, Master Tax Preparer
Category: Tax
Satisfied Customers: 1681
Experience: Enrolled Agent with 25 Years Experience specializing Individual and Small Businesses
Anne and 4 other Tax Specialists are ready to help you
Customer: replied 4 years ago.
Hi..thanks..is it a problem that i file as a professional trader now[2008] in that i'm late after april 15th 2008 or is it better to file in 2009?If i file now can i just file my amended return for 2007 or do i have to go back to include 2006?In 2006 i had a 70K gain and i'd rather maybe file in 2009 and just go back to 2008-2009?
Customer: replied 4 years ago.
whoops..file in 2009 and go back to amend 2008..07.Not include 2006...Or does it matter?..Thanks for your indulgence...
Expert:  Anne replied 4 years ago.
I'm sorry, this did not appear in my que, so I wasn't aware that you had asked a follow up question.

You must go back 2 years, and you must file an NOL by 12/31 of the year the tax return would be due in which the NOL occured. For 2008, this means that you must file the NOL by 12/31/2009, and your carryback years are 2006 & 2007.


Form 1045.

I hope this helps.

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