You can only carryover the unused loss from 2009. First the loss will offset your income in 2009 and only excess loss will be carried forward. You cannot elect to use the loss in 2010 and not it 2009.
How do you show the IRS that I am doing this. I have searched the IRS website for help and waited for 4 hours on the phone to try and figure this out. The sale of the assets were done on FORM 4797 and not SCHEDULE D.
The loss from K-1 will generate Form 4797 on your Form 1040 and presuming that you are not a passive investor and have basis in the stock, this loss will offset your other income on Form 1040 page 1.
Any loss will be carried forward. You can complete Form 1045 page 2 to determine the loss carried forward.
The loss will be carried back unless you elect to carry it forward.
Thank You I will give it a try.