Capital Gain Loss carried over from single years to married joint return

[Jason999]

Husband has 3000 capital gain loss (stock sale) carried over from his single year 2017 to married filing jointly return in 2018. Can this 3000 be deducted from his wife's income in 2018? Husband has 0 income in 2018. Both live in WA State, a community property state.

[macuser_22]

On a joint return there is no "his" or "her" income, only joint income and the cap loss carry over applies to the joint income.

[Jason999]

Your answer is incorrect. Can I get someone else who is knowledgeable respond? Thank you.

[Critter]

@macuser_22  is correct ... a federal return has no  his or hers when filing a joint return so the loss he brings to the joint return is gender neutral once the ink hits the paper. 

[VolvoGirl]

So the answer to your question is yes.  You file a Joint federal return and include everything even if one person has no income.  Was 3,000 the exact carry over amount?  That seems odd.  It might be more.  3,000 is the max loss you can show on your tax return and then you carry over the rest.

How much was his original loss?  You get to first offset the loss against any gains you have each year so that can use more of it up. Then after applying the loss to the current gains you can take a max loss of 3,000 per year. 

Did he use Turbo Tax for 2017?  Even if he didn't he should have a Carryover worksheet in his paperwork and maybe a Capital Loss Carry Forward worksheet showing the amount transferring over to the next year.

[VolvoGirl]

Enter a Capital Loss Carryover under
Federal
Wages and Income
Then scroll down to Investment Income
Capital Loss Carryovers - Click the Start or Update button

[Jason999]

I wish It were that simple, but it is not, and none of you may be correct.

Carry forward Loss is deductible depending how it is sourced. Married people have two income generating properties:

1. Separate property

2. Community property

When loss is carried over from single years, it is classified as a separate property and cannot be deducted from community income during married filing jointly years.

Can anyone knowledgeable confirm this?

[Jason999]

Am I the most knowledgeable person here asking a question and answering it for myself?

[macuser_22]

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@Jason999 wrote:

I wish It were that simple, but it is not, and none of you may be correct.

Carry forward Loss is deductible depending how it is sourced. Married people have two income generating properties:

1. Separate property

2. Community property

When loss is carried over from single years, it is classified as a separate property and cannot be deducted from community income during married filing jointly years.

Can anyone knowledgeable confirm this?

---

A joint tax return  is one tax return for both spouses.   There is no separate or community property on a joint tax return.  You are thinking of Married Filing Separately tax returns where each spouse files their own tax return, that is when community property laws come into play.

https://www.irs.gov/pub/irs-pdf/p555.pdf

https://www.irs.gov/pub/irs-pdf/p550.pdf page 4

[Jason999]

Thank you for being patient with me:)

The issue is about how to deduct loss carried over from a previous year. If husband's capital gain loss of $3000 carry over from 2017 can be deducted in 2018 from community income. If in 2018 husband earned $0, but wife earned $50,000. Both incomes added together are community income.

(The numbers are just to understand the concept. Some people had questions about it.)