use of short term loss carryover

[dsims3]

We have a short term capital loss carryover from previous years. This year we have a long term capital gain from sale of rental property. But since our income is less than $89K we don't owe taxes on this long term capital gain. Do we still have to reduce the short term loss carryover by the amount of the long term gain?

[Bsch4477]

Your taxable income includes your capital gain or loss so your carryover loss is included in that calculation. 

[dsims3]

I don't see what your point is. My point is that the long term gain is not taxable.

[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.

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.

[dsims3]

I was not talking about skipping the $3000/year. My question is whether I have to use more of it to balance a long term capital gain that is not taxable.

[Mike9241]

ok yes the short-term capital loss carryover will be used to offset that long-term capital gain. those are the tax rules. 

[Bsch4477]

All of your carry over loss will be applied to your capital gain.