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New Member
posted Jun 4, 2019 8:16:05 PM

How do I not take the $3000 Capital Loss Carryover

Using the carryover does not change my taxable income so I do not want to take it in a year where I do not need it.

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1 Best answer
Alumni
Jun 4, 2019 8:16:07 PM

To my knowledge and experience, you have to claim it....unless there is an NOL and/or it creates an NOL...and then you have to compute under the NOL rules.

Even if you don't claim it; in computing the capital loss carry over from 2016 into 2017, you MUST reduce the capital loss carryover by the amount that could be claimed in 2016.  Thus, since you HAVE to reduce the carry over anyway, you should claim the loss, since you'll lose the amount in the carry forward.

I can't find it, but something in my memory tells me that you have to claim the loss, if not otherwise prohibited.

From Pub 17

Capital loss carryover.   If you have a total net loss on line 16 of Schedule D (Form 1040) that is more than the yearly limit on capital loss deductions, you can carry over the unused part to the next year and treat it as if you had incurred it in that next year. If part of the loss is still unused, you can carry it over to later years until it is completely used up.  

When you figure the amount of any capital loss carryover to the next year, you must take the current year's allowable deduction into account, whether or not you claimed it and whether or not you filed a return for the current year.   When you carry over a loss, it remains long term or short term. A long-term capital loss you carry over to the next tax year will reduce that year's long-term capital gains before it reduces that year's short-term capital gains.

Figuring your carryover.   The amount of your capital loss carryover is the amount of your total net loss that is more than the lesser of:

  1. Your allowable capital loss deduction for the year, or

  2. Your taxable income increased by your allowable capital loss deduction for the year and your deduction for personal exemptions.

  If your deductions are more than your gross income for the tax year, use your negative taxable income in figuring the amount in item (2).    Complete the Capital Loss Carryover Worksheet in the Instructions for Schedule D or Pub. 550 to determine the part of your capital loss that you can carry over.

3 Replies
Alumni
Jun 4, 2019 8:16:07 PM

To my knowledge and experience, you have to claim it....unless there is an NOL and/or it creates an NOL...and then you have to compute under the NOL rules.

Even if you don't claim it; in computing the capital loss carry over from 2016 into 2017, you MUST reduce the capital loss carryover by the amount that could be claimed in 2016.  Thus, since you HAVE to reduce the carry over anyway, you should claim the loss, since you'll lose the amount in the carry forward.

I can't find it, but something in my memory tells me that you have to claim the loss, if not otherwise prohibited.

From Pub 17

Capital loss carryover.   If you have a total net loss on line 16 of Schedule D (Form 1040) that is more than the yearly limit on capital loss deductions, you can carry over the unused part to the next year and treat it as if you had incurred it in that next year. If part of the loss is still unused, you can carry it over to later years until it is completely used up.  

When you figure the amount of any capital loss carryover to the next year, you must take the current year's allowable deduction into account, whether or not you claimed it and whether or not you filed a return for the current year.   When you carry over a loss, it remains long term or short term. A long-term capital loss you carry over to the next tax year will reduce that year's long-term capital gains before it reduces that year's short-term capital gains.

Figuring your carryover.   The amount of your capital loss carryover is the amount of your total net loss that is more than the lesser of:

  1. Your allowable capital loss deduction for the year, or

  2. Your taxable income increased by your allowable capital loss deduction for the year and your deduction for personal exemptions.

  If your deductions are more than your gross income for the tax year, use your negative taxable income in figuring the amount in item (2).    Complete the Capital Loss Carryover Worksheet in the Instructions for Schedule D or Pub. 550 to determine the part of your capital loss that you can carry over.

New Member
Jun 4, 2019 8:16:08 PM

This would seem to indicate that one doesn't HAVE to claim the allowable deduction, as long as the allowable deduction is taken into account to determine the carryover into the following year (not skipping a year's worth of allowable deductions in determining it).


My problem is that if I claim the allowable deduction for this year, it will bring me $60 below the poverty line, which will then make me not eligible for collecting the Marketplace health insurance premium tax credit.  I didn't collect it in advance because my income had been too high, but this year investments went sour, and I ended up right at the cusp of the poverty line.  And I had been counting on getting the premium tax credit applied to the premiums I had paid throughout the year.


So I am fine with allowing for the carryover tax deduction to determine the capital loss carryover into 2019, while at the same time, NOT claiming it.


My question is - can I do that?  (And how?)  

TurboTax doesn't have that as a question.  It just went ahead and claimed that deduction for me.  But as I ask above - do I HAVE to use it?  Because if I do, I will not be eligible for the premium tax credit for the past year (which I was really counting on as 2018 came to a close).


I also consulted a tax expert (and paid to do so) through TurboTax.  But this was a completely new topic for her, and she didn't see anyway I could not claim the deduction - even if I accounted for it when determining the carryover amount for 2019.

Any guidance would be greatly appreciated, even if it is to agree with the one expert I have consulted with.

Alumni
Jun 4, 2019 8:16:09 PM

I have been out of the loop for quite awhile.  But when I worked for IRS (as a revenue agent), we could not force people to claim deductions that would lower their taxes.  Most deductions are optional in that regard.  However, before I left, there was an audit issue in progress (and I retired before I found out how it was all resolved in the courts) that would force a deduction because even though it lowered taxes, it decreased the EIC, resulting in an audit deficiency (overall a higher tax).  That issue was being pursued when I left.   Having said that, based on my years of auditing, I am of the opinion that you don't have to claim the deduction if the overall effect is to raise your computed tax.  However, if by not claiming the deduction and another tax attribute is increased and results in an overall reduction in computed tax, then I do not think you can skip the deduction.   Does that make sense?    Thus, If you claimed the deduction and your final overall tax was say $1,000; and if you did not claim the deduction, due to other attributes, your overall tax was say $900, I don't believe you can skip the deduction.  That is my opinion.