MIKE 9241 I hear what you are saying.
Thanks for all your responses by the way.
I understand that line 7 of 1040 could be either 3000$, or a smaller amount, if line 16 on Schedule D is smaller than $3000, in my case - $2500 loss. And I do get that you do not loose anything, when you add that -$3000 or -$2500 later back on your worksheet on line 2 to your “negative income” on line 1 of your carry over worksheet.
But it seems to me, what really determines your carry over loss for that year in which you have only capital gains in income is not the first two lines of your carry over loss worksheet, but line 9 of the carry over worksheet. It is asking you to enter line 15 of Schedule D which then that becomes your carry over loss for the year. That number on line 15 of Schedule D is nothing more than you subtracting ALL capital gains, lets say that was $5500 on line 13 of Schedule D from the entire carry over loss on line 14 for example $8000 of Schedule D, leaving you with $2500 to carry over for that year.
So looking at line 9 and 13 of the “carry over loss worksheet” , it is clear , one must subtract ALL capital gain, the full amount from the carry over loss. If you had 8 K in carry over loss, and 8K capital gain on Schedule D, and the 8k capital gain was your “ only taxable” income that year , then you would use up the entire amount of your carry over loss up with the way the worksheet is structured . That 8K gain is “taxable income”, you would not even owe taxes on. So how can one carry forward all “carry over loss” with low income? How is that calculation done, it is a mystery to me
Yes you can add back on the worksheet the $3000 or $2500 to your negative income but the" carry over loss "is determined by line 9 on the worksheet
