Can I defer a $3000 Schedule D Capital Loss until next year?

[MelWetzger]

I have a pretty large capital loss from a few years ago that results in a yearly Schedule D capital loss carryover and an annual capital loss of $3000 that can be claimed on line 6 of  Form 1040.

But, I have little income, about $8000 for 2019. So my income ($8000) is much less than my standard deduction of over $12,000. So my Taxable Income on line 11b of 1040 is zero, even if I do not use the $3000 Capital Loss. In other words, if I claim the $3000 Capital loss for this year, it will be "wasted" and not result in any tax advantage.

My income will go up some in 2020 or next year in 2021, because I will start taking some retirement income. And the $3000 Capital Loss would likely benefit me in terms of reducing Taxable Income (on line 11b of Form 1040). 

QUESTION(S): But, can I defer or not use the $3000 Capital Loss to a later year?

Or do I have to use the $3000 loss, even though it does not help lower my taxes?

If you have an answer, can you point me to one or more references that describe what I can or cannot do?

Thanks,

M.

[macuser_22]

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@MelWetzger wrote:

QUESTION(S): But, can I defer or not use the $3000 Capital Loss to a later year?

Or do I have to use the $3000 loss, even though it does not help lower my taxes?

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No. and yes.  The carry-over must be applied to each tax year until exhausted.   Failing to carry forward and skipping a year forfeits any remaining carry over loss.  The entire $3,000 can only offset the years tax liability.   If the tax liability less than $3,000 then less will be used.

[VolvoGirl · Accepted solution]

You have to report the carryover every year until it's used up.  You can't skip a year.  Even if you don't report it on your return you have to reduce it by the 3,000 (1,500 MFS) when you carry it over to next year.  You can't choose when to use it.

This is from the IRS Pub 550 page 66

"When you figure the amount of any capital loss carryover to the next year, you must take the current year's allowable deduction into account, whether or not you claimed it and whether or not you filed a return for the current year. "

Here is pub 550…  http://www.irs.gov/pub/irs-pdf/p550.pdf

BUT...........

If you have a negative AGI or negative taxable income it will show up on 1040  BUT it won't reduce the carryover to the next year.

[MelWetzger]

Thanks Champ.

[MelWetzger]

Thank you VolvoGirl, your answer was very helpful. There is a worksheet, Worksheet 4-1 in Pub550 on page 66, that allows the Carryover loss from 2019 to 2020 to be calculated. And, as you said, the Carryover loss was not reduced because of putting the $3,000 on line 6 of the 2019 1040 Federal Tax return.

Thanks,

M.