Q. Can I use the unused losses to offset long-term capital gains the following year and if so to what extent?
A. Yes, that's how it works. Up to the full amount of the $97,000 carry over.
But, there's a modification to your example. The first $3,000 of the carry off would would not first be applied to ordinary income. It would first be applied to long term gains, then short term gains, up to the full amount of the carry over. Anything left over (up to $3000) would then be applied to ordinary income.
Q. I understand that long-term capital losses can be used first to offset long-term capital gains and then up to $3,000 of ordinary income?
A. Not exactly. LT losses MUST be applied to LT gains and then ST gains, before (up to) $3K will be applied to ordinary income.
