do i HAVE to use any of my state CLC if there is no benefit to me ?

[runnerdude]

hi ... i'll use round numbers to make things easy ...

i entered 2024 with a CLC of $700 on my federal return ...

i had a long-term capital gain of $300 in 2024 ...

tax software applied my $700 CLC to my $300 long-term gain and

i ended up with a $400 loss for 2024 and no CLC for 2025 ... makes sense

on my state return (california) i entered 2024 with a CLC of $1000 ...

tax software applied my $1000 CLC to my $300 gain and i ended

up with ZERO gain for 2024 and a $700 state CLC for 2025 ...

here's the rub ... i wasted $300 of my california CLC because i didn't owe

any taxes (either with or without the capital gain) ... so why does the

tax software force you to use a portion of your CLC when doing so results

in NO benefit to the taxpayer ...

i feel like i justed wasted $300 of my CLC for nothing ...

thanks !

[KeshaH]

California law generally requires taxpayers to apply capital loss carryovers to offset capital gains in the current tax year. This is consistent with the federal rule, where capital losses are first applied to offset capital gains and then up to $3,000 of ordinary income if applicable.

Since you have no California tax liability due to low overall California income, the unused portion after offsetting the gains ($700 in your case) is saved for future years. Any remaining losses are then carried forward to future years.