Can Series EE Treasury Bonds Interest be Offset by Capital Gains Losses?

[TheDanimal05]

Hi Everyone. 

I have a question I could use some help on.

I cashed in some Series EE Treasury Bonds this year and received a 1099-INT form for the proceeds on the bond interest of about $40K. 

Also this year, I sold off some stock investments at a loss (-$20K)  in an effort to offset these interest gains. 

The gains in interest from the bond sale was more (+$40K)  than the capital loss on the stock sale (-$20K). 

After inputting all of the info in Turbo Tax, the 1099-INT Bond info does not seem to be combining with the Capital Loss on the Stock sale, resulting in a Capital Loss rollover ($-17K) for next years return.

Shouldn't the Bond Sale interest gained (+$40K) be a part of the Capital Gain/Loss Calc, meaning I do not have to rollover the remaining Capital Loss (-$17K) to next year and can realize it this year against the Bond gains?

[PattiF]

Earnings from bonds are taxed as interest, not capital gain. While you can hold them for the long term, the income they generate is never treated as a long

term capital gain.

Here is the IRS guide to reporting interest for Series EE bonds.

[Mike9241]

for 2021 you have $40K of interest income which can be offset by a maximum of $3K in capital losses.

you get to carryforward the unused amount of capital losses to future years to offset capital gains but a net capital loss deduction is currently limited to $3k/year