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Bill, Enrolled Agent
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I have for the following tax information for 2009. My wages

Resolved Question:

I have for the following tax information for 2009. My wages will be 20,000. Long -Term capital loss of 6,000 Short term capital loss of 5,000 Short term capital loss of 3,000 What is my loss carryover?
Submitted: 4 years ago.
Category: Tax
Expert:  Bill replied 4 years ago.
Your capital loss carryover will be $11,000 as will use up $3,000 of the losses against your other income and carryover the balance [($6,000 + $5,000 + $3,000) - $3,000)]. The $11,000 carryover will consist of $5,000 of short term losses and $6,000 of long term losses.
Customer: replied 4 years ago.
But I have read that I can only deduct up to 3,000 per year in short term capital loss and 2,000 in long term capital loss. Are you saying that my loss carry over is 5,000 of long term capital loss?
Expert:  Bill replied 4 years ago.

Confirming the information in your initial post, there is a total of $14,000 of losses comprised of a long term loss of $6,000, a short term loss of $5,000 and another short term loss of $3,000.

 

The maximum loss that can be deducted from your other income in 1 year is $3,000 (whether it is short or long term). Your remaining losses can be carried over indefinitely until they are used up and retain their character as short or long term. In this instance, the $3,000 short term loss offsets your other income and you then have $5,000 of short term carryover losses and $6,000 of long term losses for future years. So for example if you have no other gains or losses next year then you will offset your other income by $3,000 and you will then have $2,000 of short term carryover losses and $6,000 of long term carryover losses for future years. The losses continue to be carried over until entirely used up.

 

http://moneyover55.about.com/od/taxtips/a/losscarryover.htm

 

http://www.cookco.us/FAQ_capital_losses.htm

 

http://www.irs.gov/publications/p550/ch04.html#en_US_publink100010729

 

 

 



Edited by Bill on 11/1/2009 at 8:56 PM EST
Bill, Enrolled Agent
Category: Tax
Satisfied Customers: 3077
Experience: EA, CEBS - 34 years experience providing financial advice
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