Carryback losses, Amount to be Carried Back

[00p299]

Hello, I have a question regarding this message. For 2022, I have 40k capital loss carryover (imaginary number).

Enter the amount of loss you plan to carry back from 2022. You will also need to file an amended return for the year to which you're carrying back the loss.

Is this saying I can carry back the losses to prior years (2018-2021)?

If I understood correctly, 3k is the max loss deduction per year, so would I be able to deduct 3k from my income for each prior year if I were to amend? The rest of the losses would carryover to forward years correct?

[fanfare]

If you have a net section 1256 contracts loss you can carry back some or all of that loss.

you can't do that with regular capital gains or losses from stock on Schedule D.

@00p299 

[00p299]

I have a section 'Regulated Futures Contracts & Section 1256 Options 2022' under my WeBull tax form that is showing all of my SPX trades. SPX falls under 1256, so I input box 11 from my WeBull tax form into TurboTax. Shortly after is when I was prompted to carry back my losses. So box 11 is what I can carry back to prior years?

I'm going to assume that I can only carry back 3k per year rather than the entire sum against my income. Is this correct? Thanks! Appreciate the help a lot.

Below is what the tax form is showing.

Aggregate Short-Term Profit or (Loss): 40% - ####.##

Aggregate Long-Term Profit or (Loss): 60% - ####.##

11 - Aggregate Profit or (Loss) on Contracts - ####.##

[fanfare]

The reason you would carry back losses is to offset Section 1256 contract gains in a prior year.

You are not limited to $3,000.

you may be "prompted" to do it but you have to know what you're doing to do it correctly.

It is optional.

Otherwise your losses will carry forward on Schedule D just like other losses.

@00p299 

[00p299]

I think I misunderstood the first time. So 1256 gains in 2022 can be used to offset 1256 gains from prior years.

It cannot be used to reduce my income from prior years. Is this statement correct?

I did not have a 1256 for 2021. So any losses in 2022 will be carried forward.

Appreciate the help.

@fanfare 

[GeorgeM777]

Yes, the Section 1256 losses can be carried back (up to three years) but cannot be an offset against ordinary income.  The IRS provides the following information as to what you can carryback and how much:

The amount you can carry back to any prior year is limited to the smaller of: 

• The gain, if any, that you would report on line 16 of Schedule D (Form 1040) for that carryback year if only gains and losses from section 1256 contracts were taken into account; or

 • The gain, if any, reported on line 16 of Schedule D (Form 1040) for that carryback year. 

Here is a link to the above information:

Gains or Losses_Section 1256

Also, the carryback is allowed only to the extent it doesn’t increase or produce a net operating loss for the carryback year. The loss is carried to the earliest year first. 

@00p299