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Arthur Rubin
Arthur Rubin, Tax Preparer
Category: Tax
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Experience:  22 years of tax preparation experience, including individual, trust, and estate returns.
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My son has income less than the standard deduction and exemption,

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My son has income less than the standard deduction and exemption, and therefore he has no federal tax liability. He also has a capital loss carryforward. Last year my accountant deducted $3000 capital losses from his non-taxable income, which depleted his loss carryforward by $2100. Why do you have to take a capital loss when you have no federal tax liability in the first place? Can't you just carry it over intact to the following year or to years when there will be tax liability or capital gains?
Submitted: 6 years ago.
Category: Tax
Expert:  Arthur Rubin replied 6 years ago.
The capital loss carryforward instructions take into account the standard deduction, but not the personal exemption. If he had earned less than the standard deduction, the carryforward should not have been reduced for the year.

If you're talking about carryforward through 2008 to 2009, see the 2009 capital loss carryover worksheet on page D-7 of the instructions.

As for why, it's the way Congress wrote the law.
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