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Your understanding is correct. You first apply the loss to other gains in the year, then you apply the $3000 against income.
So in the first year assuming you have no gains to absorb any of the loss you would apply $3000 to income leaving $7000. Second year (assuming no capital gains) $3000 would be used leaving $4000, 3rd year $3000 leaving $1000 for the remaining 4th year.
You cannot skip a year and save for a future year but you can carry forward until used up. No time limit.
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