Can I make claim capital losses incurred in 2000 and 2008 now in 2020?

[sphegdek]

Can I claim capital losses on stocks incurred in tax years 2000 and 2008 now in 2020?

[Critter-3 · Accepted solution]

Losses incurred in 2000 should have been reported on the 2000 return and the same for the 2008 losses. Any unallowed losses are carried forward and used up each tax year as allowed.  You cannot skip the rules and apply the losses when you feel like it.  So if you did not properly report the losses in the years they happened you may need to amend all the tax years affected to see if you have anything left over to carry to the 2020 return.  Seek local professional assistance to see where you stand and if/how to correct this error. 

[Carl]

@Critter-3 If capital losses were not reported in 2000 (or 2008) and they were not reported on those year's tax returns, I don't believe you can amend that far back. But without knowing *exactly* what the losses are for specifically, it's just not possible to tell if this is something fixable with IRS Form 3115. But if it can be fixed with the 3115, it still requires professional help.

[Anonymous]

do you have the returns going back to 2000 and documents to support the capital loss amount? the IRS only has about the last 7 years of returns.  to give you some context if you had taxable income of over $3,000 each year from 2000 any capital loss would be used at the rate of $3,000 per year.  

[sphegdek]

Thanks for the helpful guidance. This would be useful for me to do further homework.

[sphegdek]

Thank you. Fortunately I do have copies of all returns from 2000. Following your guidance, my next project is to figure our for each tax year from 2000 how much of the net capital loss i could harvest. If  run into questions while doing so, I would contact you again.

[Critter-3]

Only the 2017 - 2019 returns can be amended to get the refunds ... all others are lost but the amount of the loss what could have been used must be calculated and the carry over reduced. 

[TomD8]

And you would have to reconstruct your tax returns for each and every year since the initial capital loss, in order to calculate each subsequent year's allowable carryover amount.   That's because capital losses must first be used to offset any capital gains of the same type in the current tax year before they can be rolled over to the next.

[sphegdek]

Thanks. Allow me to construct a numerical example to clarify my situation. 

Case 1. In tax year 2001, suppose I lost $80K when an Internet startup went bankrupt and claimed $3K as net capital loss in that year's f1040 and carried forward the rest.  IRS p550 says "If part of the loss is still unused, you can carry it over to later years until it is completely used up." But I goofed up and did not claim net capital loss of $3K until now. (a) Your reply below says "all others are lost." Does this mean that I have lost $3K net capital loss carryover for each year from 2002 to 2016, which amounts to $45K (=3*15 years).? (b) If I have lost the net capital loss carryover for those 15 years, then do I need to amend my tax returns for those 15 years? (c) Your guidance says "Only the 2017 - 2019 returns can be amended to get the refund." This implies that (i) I can amend tax returns for 2017-2019 to harvest $3K for each year, and (ii) going forward I can continue to claim $3K each year from 2020 until the original $80K is exhausted. Is that correct?

Case 2. Instead of $80K in Case 1, suppose I lost only $48K. In this scenario, your "all others are lost" would suggest that I cannot claim any net capital loss carryover. Is that correct?

Appreciate your continued guidance. 

[sphegdek]

Thank you very much, TomD8. This would be painful, yet great tax-learning.

[AmeliesUncle]

This is just one of many examples why doing your own taxes can cost MUCH more than bringing them to a good tax professional.