topic TT 2017 capital loss carryover using more than 3000 error, how to fix? in Investors & landlords

TT 2017 capital loss carryover using more than 3000 error, how to fix?

smooth2222 — Thu, 06 Jun 2019 10:34:46 GMT

Do you have capital gains this year?

JulieH1 — Thu, 06 Jun 2019 10:34:48 GMT

Do you have capital gains this year?

the capital loss turbo tax is using more than 3000 from t...

smooth2222 — Thu, 06 Jun 2019 10:34:50 GMT

the capital loss turbo tax is using more than 3000 from the previous year, it is an error.

Yes I have capital gains his year. its allowing me to u...

smooth2222 — Thu, 06 Jun 2019 10:34:51 GMT

Yes I have capital gains his year. its allowing me to use way over the 3000 limit, carry forward from previous year. error

No. When you have gains you can use more of the carryove...

JulieH1 — Thu, 06 Jun 2019 10:34:52 GMT

No. When you have gains you can use more of the carryover. See answer below

"then up to $3,000 of losses can be applied against ordin...

smooth2222 — Thu, 06 Jun 2019 10:34:54 GMT

"then up to $3,000 of losses can be applied against ordinary income."
3000 is the max carry over from previous years losses
turbo tax is allowing me way over the 3000 limit, read your own answer

I did read my own answer:) I completely understand it, b...

JulieH1 — Thu, 06 Jun 2019 10:34:55 GMT

I did read my own answer:) I completely understand it, but you don't so let me try it a different way. When you have gains you can use more than $3000. First, you can offset as much of the gain as needed and still use the $3000 toward ordinary up to the total amount of the loss that was carried over. I always tell my legal clients in my business tax practice that have the potential of a gain after a bad year to realize as much gain as possible to use up that loss before someone changes the law and you cannot carry it forward.

you are correct, my apologize.

smooth2222 — Thu, 06 Jun 2019 10:34:56 GMT

you are correct, my apologize.

You can use up more of the loss in one year if you have g...

JulieH1 — Thu, 06 Jun 2019 10:34:58 GMT

You can use up more of the loss in one year if you have gains.

The $3,000 limitation is specifically the opportunity to "write-off" up to $3,000 of Ordinary Income [wages/salary, interest, dividends, pension, et alii] of prior year carry-forward capital losses. In any year that you have capital gains, the sequence is this:

Any short-term prior year losses are applied as a write-off first to current year short-term gains, and if still some carry-forward loss remains, applied to long-term current year gains.
Similarly for long-term prior year losses, against current long-term gains and then if any left, against short-term gains.
Separate from that, if there are still remaining after all of that writing off of losses against gains, then up to $3,000 of losses can be applied against ordinary income.

The way the carryover works in subsequent years is this:

Each year, the entire remaining loss is available to offset that year's capital gains, if any. In addition, if there is loss remaining after offsetting all of that year's capital gains, then up to $3,000 of the remaining loss is used to offset ordinary income. Any loss remaining is carried over to the next year. That process continues until the loss is completely used up. You must claim the remaining loss each year, whether you have capital gains that year or not. Turbotax takes care of the calculations for you.

The rules and process are described in some detail in IRS Pub. 550, Investment Income and Expenses, at this link:

http://www.irs.gov/pub/irs-pdf/p550.pdf

You would be well advised to read the rules carefully (starts on page 68)