Each tax year you can only use $3,000 ($1,500 for married filing separately) of your capital loss carryover to offset ordinary income, even if you do not have other capital gains or losses in that year. Your losses carry forward until they are used up.
Limit on the Deduction and Carryover of Losses
If your capital losses exceed your capital gains, the amount of the excess loss that you can claim to lower your income is the lesser of $3,000 ($1,500 if married filing separately) or your total net loss shown on line 21 of Schedule D (Form 1040). Claim the loss on line 6 of your Form 1040. If your net capital loss is more than this limit, you can carry the loss forward to later years. You may use the Capital Loss Carryover Worksheet found in Publication 550, Investment Income and Expenses to figure the amount you can carry forward.
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