Capital Loss Carry Forward

[stvmia]

Example situation using Turbo Tax 2017 Desktop for single head of household; 

2017 reported $18,329 net loss, claimed $3,000 for 2017 tax return with a Short-term capital loss carryforward to 2018 of $15,329;

2018 Had no income, didn't file a return (forgot I had a carry-forward loss from 2017);

2019 Had no income, filed a TurboTax free online return for receipt of a $5 donation, for purposes of establishing COVID Relief Check (forgot I had a carry-forward loss from 2017);

2020 Filed a TurboTax free online return with $21,000 gross with standard deduction, net taxable income of $8648, $863 fed taxes due, 1,385 fed taxes withheld = $522 refund rec'd (forgot I had a carry-forward loss from 2017).

QUESTION #1: Do I need to go back and file 2018 even though there is no income, for purposes of carrying forward the 2017 Capital Loss of $15,329? Can I do this with online TurboTax online? 

QUESTION #2: Do I need to go back and file Amended 2019 via TurboTax online even though there is no income, for purposes of carrying forward the 2017 Capital Loss of $15,329?

QUESTION #3: If the answer to #1 and #2 are yes, am I able to Amend 2020 TurboTax online even though I have already rec'd a $522 refund, for purposes of claiming any part of the 2017 Capital Loss Carryforward of $15,329 that was supposed to be carried from 2017 to 2018?   If yes, will the TurboTax 2020 online program which I used be able to automatically import the 2017 TurboTax desktop return-worksheet to automatically calculate the Capital Loss Carryforward ?

Thank you!

[ColeenD3 · Accepted solution]

Yes, I would amend each year to show the continuity of the carryover. Here is an excerpt Capital Loss:

Your capital loss carryover is reduced by the amount of capital loss that was actually used to reduce your taxable income, not by the amount of capital loss deduction shown on your tax return. In figuring this amount, you’re allowed to use all other deductions before using the capital loss deduction. This rule is reflected in a Capital Loss Carryover Worksheet that appears in the instructions for Schedule D and also in IRS Publication 550, Investment Income and Expenses.

I would, for prior years, print form 1040 for years you had no income and1040x from the IRS website and do it by hand. You are not changing anything, you are showing the carryover from year to year. The 2020 program will not bring forward from 2017. The 2020 amendment 1040x is not yet ready.

[stvmia]

Thank you Coleen.  Your information was very helpful!

Now I have one f/u question.  Can I use some portion of the carryforward in an amended 2020 return to increase my refund amount  ?

And a F/U question for any TurboTax  support people who might be monitoring, how can I use TurboTax to: 1) file a no-income 2018 return that imports my 2017 desktop TurboTax data; 2) amend my 2019 online free TurboTax no income return to include the carryforward loss data from 2017-2018?; and, 3) get my TurboTax online free 2020 return amended with the carryforward loss data from 2017-2019?

Do I have to do it all manually or does TurboTax have the products to support this lookback situation?

Than you again coleen!!

How can I use Turbo Tax 

[JohnB5677]

@ColeenD3 gave you excellent advice, and yes the Capital Loss Carryforward can reduce your 2020 taxes.

You will be able to download the software for free if you originally purchased the TurboTax software.  You will be able to use the amend process and select back to 2017 to prepare your returns.

You will receive a downloaded copy of the desktop version of TurboTax.  Here is how to amend your 2019 tax return.

Some quick ground rules:

1. Be sure the original return was filed and accepted.
2. DO NOT go back into the return or change anything before you start the amendment process.
3. Gather everything you need before you start.
4. Before you start be sure to save a copy of the original return in a safe place.
5. Complete the entire amendment process before you log out.
6. Save the amended return under a different name. 

You can correct a return that you've already filed and had accepted.  Select the year that applies and use this guide to proceed.

Select your tax year for amending instructions:

• 2020
• 2019
• 2018
• 2017

 For additional information please refer to  How to Amend

[stvmia]

Thank you very much John and Coleen!

Your information has already been put to use.  Since I used the free online version of Turbo Tax for my  2019 and 2020 returns, I simply downloaded the IRS 1040X PDF and filled it in (using as my guide the amendments I generated on another free platform which lets you get to the final "review" stage before deciding whether to pay for a final with no watermark - why pay when I had no income in 2018-2019...).  I will wait and see if Turbo Tax charges a free online user for a 2020 amendment, and if they do, I'll repeat the same exercise on the 2020 1040x on the alternative platform. 

[stvmia]

BTW, the 2020 1040x has been out for a while now... (https://www.irs.gov/pub/irs-pdf/f1040x.pdf )

[djhpti]

I have an investment in an S corp that had a loss in 2019 that very slightly exceeded my investment (and due to the very small amount did not treat it as a carry over loss), and unfortunately another loss occurred in 2020.  The only investment this company has is an investment as a limited partner in a limited partnership ship that I work at full time. I believe that I cannot take this loss reported on the 1120-S on my return because even though my entire investment is at risk, as an investor in a limited partnership there is no risk above that investment - but there does not appear to be a way in the software to do this unless I say that I did not materially participate in the business - which of course I did.  Does anyone have a better way of reporting this?

Also, I have the same situation with a 1120-S with the general partner - and it is not at all clear whether I have risk over and above my investment in the general partner - can I claim that loss? and if so must I report that income if the company dissolves without that additional liability?

[sts_66]

I have a different issue - I had a $2696 capital loss carryover from the prior year, but in the carry forward worksheet TurboTax is showing zero in the 2020 carry forward loss (line 13 of 2020 worksheet), while line B, capital loss carry forward from 2019, shows that -$2696 loss. Why is Turbotax not allowing me to carry forward the unused cap loss?

[stvmia]

Look carefully to see if the program applied your $2696 capital loss carryover from 2019 TO YOUR 2020 INCOME TAX RETURN.  If they did, you would not have anything to carryover...

[jnjtxs2020]

in 2018 we had capital losses but the carryover (line 14) on the return is blank and therefore does not show on the 2019 return. 

Our 2018 return we had capital loss but the carryover line (14) is blank and the 2019 does not show the 2018 loss. Can we recoup the loss through an amended return or another way?

can