Yes, your capital loss is taken into account on your Oregon income tax return; but no, you cannot deduct the loss separately on your Oregon tax return. That's not how the Oregon income tax calculations work. How do they work, then?
Well, let's try to explain this in a way so that everyone can understand. Perhaps the best way to do that is to follow the actual flow of the tax forms and "let the math guide us."
We begin then with a standard federal tax Form 1040. We enter our capital loss on Line 13, and that figure is included in the calculations as we add everything together down to Line 37 (which is known as our federal AGI, or Adjusted Gross Income). Please see screen-capture images # 1 and # 2 below for a visual illustration -- simply click the picture icon to open the file.
Our federal tax return is then completed normally (not shown in the images for the sake of keeping this example simple). When we get to our main Oregon state tax return, Form 40, we begin that state tax return on Line 7 . . . the starting dollar amount number for which is taken directly from the federal Form 1040, Line 37. Please see screen-capture images # 3 and # 4 below for an illustration.
If you study those tax returns and these images closely, you'll very quick see (and understand) that your $3,000 capital loss is not only incorporated into your federal return, but is also (automatically) taken into account as well on your Oregon tax return.
And that is why you don't enter your capital loss separately on your Oregon tax return: because doing so would be taking a "double deduction" for the same amount of loss. This is so because the information about the loss is already full-captured by the Oregon tax return before you even begin adding or subtracting anything else.
Hopefully that explanation was easy enough to follow and made good sense.
However, if you have further
questions, encounter any difficulties, or just want to speak with a live tax
expert, please feel free to contact us. We
would be happy to help you (and as a paying customer, the call is free to
you). Here is a link where you can create a support ticket and reach us:
https://support.turbotax.intuit.com/contact/
Thank you for asking this question.
