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geedubya55, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 358
Experience:  17 years experience in business and individual taxation specializing in small business and farming
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If I invested $25,000 in the mutual funds in 2005, and steadily

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If I invested $25,000 in the mutual funds in 2005, and steadily lost $17,000 of that money up until 2009, when I finally drew what funds were left out of the market completely, how do I deduct my losses?
Submitted: 5 years ago.
Category: Tax
Expert:  geedubya55 replied 5 years ago.

Thank you for using Just Answer.


In the year that the mutual funds were sold, you would report the sale on schedule D. You would also include your cost basis of $25,000. The net result would be a loss of $17,000 on schedule D. However, since the sale of mutual funds result in a capital loss, you will only be able to deduct $3,000 of the loss against ordinary income. The unused loss would then carry forward to the 2010 return and you could deduct up to $3,000 against ordinary income and the remainder continues to carry forward to subsequent years.


If you have any capital gains, you can offset capital gains with the capital losses to any extent, but you can only deduct $3,000 per year against ordinary income. Worst case scenario is that it would take 6 years to fully deduct the loss.

Customer: replied 5 years ago.
Thank if I did not deduct anything from my 2009 tax form, I will have to amend that as well as the 2010 I correct?
Expert:  geedubya55 replied 5 years ago.
Yes, that is correct. You will need to amend 2009 and 2010 to take the loss.
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