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bubbacook
Returning Member

Capital Loss Scenarios

I have a couple of capital loss scenarios. In all these scenarios, I am talking about long-term capital losses/gains.

 

1) Suppose I have $24,000 in capital losses from last year. I plan to use $3,000 in losses each year for the next 8 years. If I have another $3,000 in losses sometime during those 8 years, can I use that new loss in the 9th year, because it would not be 8 years old yet?

 

2) Suppose I have $24,000 in capital losses from last year. I use $3,000 in losses when filing my taxes and I carryover 21,000 in losses. Next year, I have a capital gain of $21,000. Can I use all of my 21,000 carryover losses to offset my 21,000 gain the next time I file taxes?

 

3) Suppose I have $50,000 in capital losses from last year. I use $3,000 in losses when filing my taxes. Can I carryover 47,000 in losses? In other words, is there any limit to how much loss I can carryover to the next year?  I've heard there is an 8-year limit to use losses, but is there a dollar limit?

 

Thanks for the help.

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2 Replies
JohnB5677
Employee Tax Expert

Capital Loss Scenarios

We can take each scenario individually.

  1. Yes, If you had no Capital gain, and an additional $3,000 of loss it would be carried to the 9th year.
  2. Yes, if you had profits of $21,000 and you have carryover losses of $21,000 there would not be a Capital gains tax.
    1. In fact if you had $19,000 of capital gain you could use that and still take $3,000 carryover loss.
  3. Yes you can carryover the $47,000.  There is no value limit to the loss.
    1. Regarding the Time Limit - Carryovers of capital losses have no time limit
    2. However,  They are not transferable to another taxpayer.
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Capital Loss Scenarios

You get to first offset the loss against any gains you have each year so that can use more of it up.  Then after applying the loss to the current gains you can take a max loss of 3,000 (1,500 MFS)per year.  Turbo Tax does all the calculations for you.  Just enter the prior year carryover amount.  There is no time limit or max amount to use losses.

 

And You have to report the carryover every year until it's 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) when you carry it over to next year.  You can't choose when to use it.

 

 

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