@psullivan12 wrote:
If I dont claim both in the same year I only get to claim the max offset of $3k carry over loss.
Not exactly. It depends on whether the gain occurs before or after the loss. If the gain and the loss occur in the same year, the entire loss will be offset against the gain.
If the loss occurs in 2021, and the gain occurs in 2022, then in 2021 $3,000 of the loss will be offset against ordinary income, and the remaining loss will be carried over to 2022 (if you have no capital gains in 2021). In 2022, the entire carried over loss will be offset against the 2022 gain, not just $3,000. So postponing the gain might be an option for you.
Only if the gain occurs in 2021 and the loss in 2022 or later are you faced with possibly only using $3,000 of the loss each year. Each year the carried over loss will first by offset against any capital gains you might have that year, and then $3,000 of the loss will be used to offset ordinary income.
When I say that the loss occurs in a particular year, I mean that that's the year that the debt becomes completely worthless, as Rick19744 described. You might not have much control over when that happens. You can't just choose to declare the loss in a year that's advantageous for you. When an identifiable event occurs that makes the debt completely worthless, that's the year you have to claim it. You can't claim it in an earlier year if all the conditions to make it completely worthless have not yet occurred. And once all those conditions occur, you have to claim it that year. You can't postpone claiming it to a later year.
