You can use up more of the loss in one year if you have gains.
The $3,000 limitation is specifically the opportunity to "write-off" up to $3,000 of Ordinary Income [wages/salary, interest, dividends, pension, et alii] of prior year carry-forward capital losses. In any year that you have capital gains, the sequence is this:
- Any short-term prior year losses are applied as a write-off first to current year short-term gains, and if still some carry-forward loss remains, applied to long-term current year gains.
- Similarly for long-term prior year losses, against current long-term gains and then if any left, against short-term gains.
- Separate from that, if there are still remaining after all of that writing off of losses against gains, then up to $3,000 of losses can be applied against ordinary income.
The way the carryover works in subsequent years is this:
Each year, the entire remaining loss is available to offset that year's capital gains, if any. In addition, if there is loss remaining after offsetting all of that year's capital gains, then up to $3,000 of the remaining loss is used to offset ordinary income. Any loss remaining is carried over to the next year. That process continues until the loss is completely used up. You must claim the remaining loss each year, whether you have capital gains that year or not. Turbotax takes care of the calculations for you.
The rules and process are described in some detail in IRS Pub. 550, Investment Income and Expenses, at this link:
http://www.irs.gov/pub/irs-pdf/p550.pdf
You would be well advised to read the rules carefully (starts on page 68)
