Stock loss deductions

[sjirey]

How much of a stock sales loss can I deduct in 2017?

[TomYoung · Accepted solution]

Well, not exactly.  The mechanics of the deduction of losses dictates that capital losses are first deducted against capital gains.  So If you have, say, $15,000 of capital gains then you can deduct up to $15,000 of capital losses against that gain, netting to $0.  Continuing our example, if you have more than $15,000 of capital losses then only $3,000 of the "excess" loss can be deducted against "ordinary" income.  ($1,500 if filing "married-separate".)

Any capital loss beyond that $3,000 is carried forward.  The cycle repeats with carried forward losses first applied against capital gains and if there's still loss left over, up to $3,000 of that loss gets deducted against ordinary income.

Tom Young

[Hal_Al]

$3000. You are limited to $3000 per year. Any additional can be carried forward to next year and future years until used up at the rate of $3000 per year. Each year capital losses are first used to reduce capital gains before being deducted against ordinary income. Example: you lost $20,000 on stocks in 2017. You may deduct $3000 for 2017 and carry a $17,000 loss forward to 2018. In 2018, you make $5000 in the stock market; 17,000-5000= $12,000 net loss for 2018, you may deduct $3000 for 2018 and carry $9000 forward to 2019.