So a few comments here:
- Interesting you would receive a large distribution with little basis. You may be involved in a real estate venture, there was refinancing, and some cash was then distributed. If that is the case, then you have what is known as debt financed distributions. Should this be your facts, I would recommend you consult with a tax professional as there are some nuances that need to be addressed as a result.
- Aside from the above, the ordering rules are taxpayer favorable. Basis is first increased by items of income, distributions are adjusted next and then finally adjusted for any losses.
- Based on bullet 2, since your distributions exceed your basis, then your capital loss will be carried forward and utilized when you have basis. The capital loss will be carried forward indefinitely until you have basis and also capital gains to possibly offset the loss; except for the fact that you would be able to utilize $3,000 per year in excess of any capital gains.
*A reminder that posts in a forum such as this do not constitute tax advice.
Also keep in mind the date of replies, as tax law changes.
