Must I use a tax loss deduction in year incurred o...
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New Member

Must I use a tax loss deduction in year incurred or can I defer till next year

I have a capital loss[stock] this year but low tax rate. Will be higher in 2021 and don't want to use loss this year. Can I do this?
3 Replies
Level 15

Must I use a tax loss deduction in year incurred or can I defer till next year

No. Capital losses must be claimed each year and can reduce ordinary income by $3000.  The remainder (if any) is carried to the next year.   Failing to claim the loss in any year prohibits the remainder to be carried forward and it is lost.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
Level 15

Must I use a tax loss deduction in year incurred or can I defer till next 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.

Level 15

Must I use a tax loss deduction in year incurred or can I defer till next year

That is correct.   It does not mean that the carryover is always reduced by $3,000 if you did not have that much taxable income to reduce, but it still must be reported each year.   The carry-over amount can only come from the carry forward amount of the prior years schedule D.  If no prior years return was filed with a schedule D then there is a zero amount to carry forward.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
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