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 remainder of loss carries forward to next year - and continues year-to-year until the capital loss is exhausted either through write-off against gains or through the write-off against ordinary income..
If this posted response is useful to you, please click on the upraised hand in the lower left of this post. Thank you. Scruffy Curmudgeon--PFFM/ IAFF, retired FireFighter/Paramedic - Locals 718/30, Veteran USAR O3 AIS/ASA '65-'67
NOT INTUIT EMPLOYEE
USAR 64-67 AIS/ASA MOS 9301 - O3
- Just donating my time
**Say Thanks by clicking the thumb icon in the lower left corner -it means nothing but makes those than answer feel wanted.
