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Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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I invested $15,000. in a mutual fund stock in 1998.Since ...

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I invested $15,000. in a mutual fund stock in 1998.Since that time that stock declined to a value of $8,169 in 2007 and we sold the stock in April. At the end of the year that value was reported to IRS on a 1099 B form as income when in fact we had an $6,831 loss. How should this be shown on my 2007 Income Tax form?

Hello Ronna

You will fill out Schedule D to report the sale of this stock. In Section II of Schedule D, fill out the name of the stock you held, the date acquired and the date sold. The fill out the purchase price, sale price and the gain or loss. In this case it will be a loss of $6,831 on this particular sale. This amount will then be carried down to line 15. The next entry you will make is on line 21 of Schedule D. Here you enter your actual loss or $3,000, whichever is less. $3,000 is the most you can claim in any one year for a loss on Schedule D. This loss amount will then carry over to your Form 1040, line 13, and $3,000 will be deducted from your adjusted gross income and will not be subject to tax.

The balance of what you lost ($3,831) will be saved and carried over for future tax returns. Each year you can continue to take a loss of up to $3,000 until your losses are fully written off. Here is a link to Schedule D for your reference.

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