capital loss carryover

[dimi1927]

dear community,

i had a capital loss from about 8 years ago, which i have never claimed on any of my tax returns, but I wanted to start claiming it this year. i read that, if i am married, filing jointly, i can claim up 3,000 dollars per year for capital losses. just wanted to please ask a few questions. 

since the loss occurred 8 years ago, is there an expiration date of when i can actually claim this loss. or if i have not yet ever claimed it on any of my tax returns from prior years, then i can still claim it whenever i want? no time limit essentially?

also, i was trying to do it in the online platform, premium version, i clicked on capital loss carryover, but after that for some reason im not able to figure out where i can actually enter the amount that i would like to claim as a carryover.

thank you so much for your help, time, and attention

[DaveF1006]

To clarify, did you have any additional capital gains or losses during this 8-year span?

[dimi1927]

sorry, right, ill be more specific. basically, about 8-10 years ago, i invested in some stocks which took a massive dive. since then, those stocks have been close to zero. so over the course of the past 8 years, they have hovered around in penny sized amounts. and i've never had additional losses from other accounts in the past 8 years, i never invested again. basically after those stocks went down, i stopped paying attention to them because i didn't know at the time that you can claim capital losses (i wasn't that familiar with the tax code, etc). but in recent years, i've started to get slightly better acquainted with how the tax system works and read that i can claim these losses. so right now im just trying to figure out exactly how i can do this. thank you again!

[VolvoGirl]

Wait.  Do you still own the stocks?  Or did you sell them years ago?  You only claim the loss when you actually sell them or they go to zero and are worthless.  If you sold or sell them you can deduct up to 3,000 (1,500 MFS) per year. The rest of the loss you have to carry over each year until it is used up. You can't skip a year.  Even if you don't report it on your return you have to reduce it by the 3,000 (1,500 MFS) for each year  when you carry it over to next year. You can't choose when to use it.

So if you sold it 8 years ago you have to reduce the loss carryover by 24,000 (3,000x8) on your 2023 return.    

[fanfare]

If you still have that stock in your account, there is no capital loss until you sell.

2024 is the first year you might report that you sold that stock at a loss. You will get a 1099-B from the broker showing your proceeds.

@dimi1927 

[dimi1927]

to the two responses above, thank you both so very much. yes, you are both indeed correct. i have yet to sell those stocks. what happened initially, i was so disappointed that they went down so significantly, that i just stopped paying attention to them. at this point, i really need to dig through old files, emails, papers to even find my client portal to access that account. i think at some point the investment company with which i made those stock purchases may have been bought by another or changed names. i really need to dig through, find it, log into the account, and sell those stocks. again, thank you both so much for all the help and advice, really means a lot, and very grateful.

[dimi1927]

if i may please, just to further follow up on this answer.

"If you sold or sell them you can deduct up to 3,000 (1,500 MFS) per year. The rest of the loss you have to carry over each year until it is used up. You can't skip a year. Even if you don't report it on your return you have to reduce it by the 3,000 (1,500 MFS) for each year when you carry it over to next year. You can't choose when to use it.

So if you sold it 8 years ago you have to reduce the loss carryover by 24,000 (3,000x8) on your 2023 return."

so for example,

lets say i sell those stocks this year (2024), and for instance, there is a loss in the amount of 20,000.

when i filed my taxes in 2025 for the 2024 tax year, i can claim up to 3000 of losses. thus i will have 17,000 of loss amount left over for the 2025 tax year, and in 2026 i can claim again up to 3000 losses. so on and so forth.

the other part that im not so clear on also is when you mentioned about "You can't skip a year. Even if you don't report it on your return you have to reduce it by the 3,000 (1,500 MFS) for each year when you carry it over to next year. You can't choose when to use it."

what do you mean "you can't skip a year". do you mean that once i start claiming a loss, then for the subsequent year, even if i do NOT continue to claim the loss, i still have to reduce the amount by 3000. so for instance, if lets say in the above example, in 2025, i will claim a 3000 loss (20,000-3000 = 17000), then in 2026, let's say i decide to NOT claim a loss of 3000 again, but yet i STILL have to reduce the carryover amount by 3000 (17,000-3000=14,000), hence, if in 2027, i will once again want to claim the loss, i cannot start from 17000, i have to reduce from 14,000.

thank you again, really appreciate your help.

[fanfare]

If your AGI is high enough you will use up $3,000.

If your AGI is very low, you will preserve your loss carryforward.

@dimi1927 

[VolvoGirl]

Yes.  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.

[Mike9241]

you have not sold the stock, so the first year you can report the loss assuming you sell is 2024 - contact your broker - - because sometimes it's hard to sell what are referred to as penny stocks/blue sheet/pink sheet stocks. since you have not sold them, you have not used up any of your loss.