$3k max capital loss vs. capital gains.

[JackStraw42]

Hi guys.  I took a big long term capital gains loss in 2023.  I'm reading that there is a maximum capital gains loss of $3k per year, with the rest being carried over to future years.  My question is, is it a maximum of $3k, or a maximum of $3k over your capital gains?  If i am claiming $10k in capital gains, can I claim $13k of capital loss?

Thanks!

[Bsch4477 · Accepted solution]

Your loss is subtracted from your gain. If there is loss left over $3,000 is subtracted from your regular income. If some loss is still not used up it’s carried over to the next year. 

[VolvoGirl · Accepted solution]

Yes.  You get to first offset the loss against any gains you have each year.  If you have investment sale losses, after you subtract the losses from your gains you can deduct up to 3,000 (1,500 MFS) per year. The rest you will have to carryover until it is used up. You can't skip a year.  Turbo Tax figures it all out for you and carries over any loss to next year.  

[JackStraw42]

Thank you!

[JackStraw42]

You mentioned that you can't skip a year.  Thanks for that!  I wasn't aware.  Is it safe to assume that you have to take the maximum allowable amount each year?

[VolvoGirl]

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.

This is from the IRS Pub 550 page 66

"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. "

Here is pub 550…  http://www.irs.gov/pub/irs-pdf/p550.pdf

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.

[JackStraw42]

Great, thanks again!