Capital Loss Carryover - When Capital Gain is under 0% TI threshold

[Gman708]

I have a capital loss carryover, but this year I have a capital gain that is under the 0% threshold.  My preference would be to save my CLC for a future year,  and not apply it to this year's gain.   TT is not letting me do this. 

Does IRS require that the CLC is applied to any capital gains, regardless of amount and taxability? 

[VolvoGirl · Accepted solution]

Yes, you can't skip a year.  But if you have a negative AGI or negative taxable income it will show up on 1040 BUT it won't reduce the carryover to the next year.

[Gman708]

I have a positive AGI and TI,  including my 56k cap gain,  just not high enough to hit the 94k MFJ threshold for Cap Gains tax.  So I have to burn 56k of my 74k CLC even though I dont need it this year?

[Mike9241 · Accepted solution]

The tax brackets for long-term capital gain income are determined after all other income.  The tax laws require your capital loss c/o to be used to offset current year capital gain income 

for example: current year LT capital gains $56K

current year non-passive loss $-2K

AGI = $54K

CLCO from 2023 $72K

tentative usage $59K making line 7 on 1040  -$3K and AGI -$5K. Since the $3K capital loss does not provide a benenfit it is not used and your CLCO to 2025  would be $16K

the remaining $2K of negative AGI becomes a Net operating loss c/o to 2025 (not calculated by Turbotax)

[Gman708]

Thank you this is very helpful.