What if you didn't document tax loss carryforward every year ?

What do you mean by "needed the remaining loss since then"  ... was he not required to file a return for any of those years?

Hal has a good answer here  ... you will need to at least compute the loss carryover each year even if you don't file a return:
<a href="https://ttlc.intuit.com/questions/2566411-do-i-have-to-use-a-capital-loss-carryforward-even-if-i-have-no-taxable-income" rel="nofollow" target="_blank">https://ttlc.intuit.com/questions/2566411-do-i-have-to-use-a-capital-loss-carryforward-even-if-i-have-no-taxable-income</a>

He only had $15k /year of SS income in those years.  I think he was required to file a return.  He just didn't use any of capital loss carry forward.

If Social Security was his only income, he did not need to file a return.

Part of the carried over loss is used to offset ordinary income (not capital gains) each year. That's why Critter had trouble understanding your statement that your friend "never used or needed the remaining loss." "Is this a problem?" Yes. "Something he should have done" is carry over the loss each year and show it on his tax return. It's not "fully documented" if he didn't do that.

He cannot just take the loss that remained in 2007 and use that amount on his 2015 tax return. He has to recalculate each year's tax return from 2008 through 2014 with the loss carryover to determine how much is still remaining after 2014. The capital loss carryover from 2014 is what he can use on his 2015 tax return.

He should file amended returns for 2012, 2013, and 2014 if there is still a carryover in those years. He may get additional refunds because the loss carryover will reduce his taxable income. His tax might have been lower in 2008 through 2011 if he had properly carried over the loss, but it's too late to get refunds for years earlier than 2012 now.

Maybe he can still carryover the full amount?  Does this apply if you have zero AGI (well he would if he took the -3,000 each year)?  If you have a negative AGI or negative taxable income read Pub 550 page 69 on Figuring your Carryover.  So even though it shows it on 1040 line 13 it doesn't reduce the carryover to the next year.
 <a href="http://www.irs.gov/pub/irs-pdf/p550.pdf" rel="nofollow" target="_blank">http://www.irs.gov/pub/irs-pdf/p550.pdf</a>

Thanks for comments.    So if the original loss was $100k,  he should have carried forward $3k/year against ordinary income for years 2008 - 2014 (7 years).  Four of those years, 2008-2011 are too late to amend, so he loses $3k of losses for those years.  For years 2012-2014, he should amend those returns, claim the $3k carryforward against ordinary income.

So I am hoping he can use $79k ($100k - $21k discussed above) past unused losses against a gain in 2015 ?

Thanks so much !

As indicated above, if his only income was nontaxable Social Security,  there is no ordinary income to offset those years.

Don't just assume that $3,000 would be used each year. Do the calculations. As VolvoGirl and SweetieJean suggested, it's possible that in some years none of the loss got used and the full remaining amount got carried over.

And it might depend on how you are filing.  Like Single, Married Joint or Married filing Separately.  If MFS you only get to take 1,500 loss per year.

For each year, if all income other than the $15k of Social Security income totals less than the standard deduction amount for that year and there were no capital gains in those years to which the carryover would have to be applied, it appears that the entire LT capital loss will have carried forward.  The way to know for sure is to create a pro forma tax return for each of those years, as rjs suggests.

But I think EVERYBODY is forgetting that he failed to claim the 3K losses for each year subsequent to 2007. Since IRS rules force you to claim your maximum capital losses EACH YEAR in order to carry it forward how can he carry ANYTHING forward legally since he failed to report the losses in 2008, 2009, 2010, and 2011 ??? Yes he can amend his 2012-2014 tax returns but he already failed to claim the 3K in 2008-2011. This will actually PRECLUDE him from amending his return to reflect losses since the 2008 thru 2011 returns cannot reflect his losses OR his possible GAINS. The possible GAINS pose a problem to his losses. This is why the IRS rules FORCE you to use your losses EACH year. You cannot skip a year, and in his case SEVERAL years and then decide later that you need to use them. You can try to file and maybe not get caught but it is ILLEGAL. If you skip a year and do not claim your losses one year then you are not eligible to suddenly pop up almost 10 years later and go OH YEAH I had losses 10 years ago. I love turbo tax but they are not giving correct info on this one.

My original post covered that situation ....

Hal has a good answer here  ... you will need to at least compute the loss carryover each year even if you don't file a return:
<a href="https://ttlc.intuit.com/questions/2566411-do-i-have-to-use-a-capital-loss-carryforward-even-if-i-have-no-taxable-income" rel="nofollow" target="_blank">https://ttlc.intuit.com/questions/2566411-do-i-have-to-use-a-capital-loss-carryforward-even-if-i-have-no-taxable-income</a>

@tdog66 - Nothing prevents him from amending his 2008 through 2011 returns, but he doesn't have to and there is no benefit in doing so. There is a statute of limitations for tax returns. Once the statute of limitations has run out, the return is considered "closed." That means you can no longer get a refund for that year, and the IRS can no longer audit the return (except in the case of a major understatement of income or outright fraud). But you can amend returns as far back as you care to. You just can't get refunds anymore.

Without actually filing amended returns, he can still recalculate his taxes for those years in order to come up with the correct capital loss carryover for 2012 and later. That is what we are saying that he should do, and it is perfectly legal. His failure to use the carryover in 2008 - 2011 does not "preclude him from amending his returns" for the years that are still open. In fact, he is actually required to amend his returns for 2012 through 2014 because the returns he filed for those years are incorrect, and those years are still open. We are not forgetting that he didn't use the carryover in 2008 through 2011. Recalculating his taxes for those years, even though he does not file amended returns, is the correction for having improperly skipped several years, and allows him to file correct returns for the years that are still open.

I'm not so sure the IRS will allow you to go back and recalculate your taxes from almost 10 years ago ? I mean from what I read it said you must claim the maximum allowable amount of 3K (or 1500 if MFS) in the year that the loss was realized in order to correctly carry it over into the following years. Also you said that he doesn't have to amend his 2008-2011 filings and while that may be true he DOES have to recalculate them for the purposes of getting the CORRECT carry over of capital losses !!! In 2008 to 2011 he may not have been eligible to take the 3K loss. With no way to look at it how can we be sure? There in lies the problem. Without an ACCURATE calculation of the carry over loss amount the IRS is not going to allow it. If that were the case I could just make up a loss from 10 to 15 years ago and carry it over each year until I die.

Yes. Hals answer sounds correct. You cant carry over your losses accurately if the IRS cannot review your "personal deductions" from 9 years ago to see if your even eligible to use a 3K capital loss carry over almost 10 years late AND to get the CORRECT amount that you are attempting to carry over for subsequent years.

The initial people who answered are forgetting that "personal exemptions" affect your 3K carry over. It may actually reduce it so whoever is telling this guy that his 2008-2011 tax returns don't come into play are wrong. They very much DO come into play and there in lies the problem. I would actually ask Hal because he is right. This becomes a huge problem and it IS very complicated. He did not keep a carry over record for at least 8 past tax filings. IRS will definitely see this as a problem. Like I said earlier, he can try it but I doubt it will go through.

While lack of records may complicate the determination of the amount of loss carryover that remains available to be reported on tax returns for years that are still open, it does not change the necessary process for doing so.  For each closed tax year (2008-2011) the amount of loss that *should have been* reported must be calculated and reduces the amount that remains available to be reported  on the amendment for 2012 and beyond.

It seems that your concern might be that the loss carryover would be mysteriously (to the IRS) appearing on the amended tax returns without having been present on the 2008-2011 tax returns and that this might raise a red flags with this IRS.  However, this is addressed with properly prepared explanation statements included with the amendments.  These explanations should show the amount of loss carried over from 2007 and the reductions from that amount attributable to the applicable loss determined from each of the recalculated tax returns leading up to the tax return being amended.  If the IRS finds that explanations insufficient, the IRS might ask to see amended 2008-2011 tax returns to substantiate the numbers in the explanations, but amendments for 2008-2011 would not result in any tax refunds for those years.

Thanks for everyone's comments !  

Is the an easy way to tell if a TT file was generated independently or imported from a previous year ?   Long story but this person did not file all the returns "in order" - some years were skipped, done later, real mess.  We have what we think are native TT files from each of the years (and outputted  PDF).

Look for way to confirm if, for example, 2010 return submitted was started from 2009 import (or started independently).   There's a lot of transactions and complications - so it is not obvious from looking at submitted PDF that "import" was used to initiate each year.

The loss carryovers would be shown on TurboTax's Federal Carryover Worksheet.  With this sheet opened in TurboTax's forms mode, a value transferred from the previous year's tax return and not subsequently modified would be shown in green.  On the PDF of this worksheet it won't be possible to tell if the amount in the previous-year column transferred from the previous year's TurboTax file or was instead entered or modified from what was transferred.  However, you can compare the Federal Carryover Worksheets from one year to the next to determine if the carried-over amount agrees with the previous-year's tax return.  If the amounts do not agree, you can do a pro forma (for years prior to 2012) or and actual (for 2012 and later) amendment to use the amount that should have carried in from the previous year and determine the amount that carries over to the following year.  Each amended year would feed the amendment for the next.

Thanks. I guess I'm going to have to install several years of TT - I'm assuming/hoping it is possible to have multiple years installed.  The 2009 information I have is the native .tax2009 file (can't be opened by TT 2014 installed) and the "to the IRS" PDF (which does not include above worksheet).

Stupid question please: On 2009 Schedule D, Line 6, "Short term loss carryover" -- this is this the amount carry-overed from 2008 to 2009, correct ?  It is not amount to carry over to 2010.

If above correct, then if a return has a negative dollar amount on 2009 Sch D Line 6 - it would mean that TT "imported information from previous" year (from 2008).   

The year that has nothing on that line "broke the chain" of carryforwards - and from that  "broken chain" year I need to redo the tax year and properly import from previous year.

You all are amazing in your expertise and willingness to help !  Thanks.

Sch D line 6 is the prior year Short term loss carryover amount ... line 14 is the long term  and they were either entered or imported.  

If there is nothing on the line and there should be are the years that need help. Then from the first year fixed you may need to adjust all the years going forward.

<a href="http://www.irs.gov/pub/irs-prior/f1040sd--2009.pdf" rel="nofollow" target="_blank">http://www.irs.gov/pub/irs-prior/f1040sd--2009.pdf</a>

Multiple years of TurboTax can co-exist on the same computer at the same time.  The problem with some of the older years installed from a CD is that they *may* no longer update.  TurboTax doesn't officially support prior to 2011, so I'm not sure if those older CD's will update, or if the state program can be downloaded (if applicable).   CD's come out very early in the season and have the early season forms prior to updates and finalizations.  If you had download installation files for those years, however, they might be more up-to-date since the ones in your download account are updated periodically.