Do I have option not to use my long term capital loss to offset the long term capital gain? I prefer to pay tax on the capital gain.

[tc333]

Do I have option not to use my long term capital loss to offset the long term capital gain? I prefer to pay tax on the capital gain and leave my long term capital loss for future tax benefit. But, TT does not provide such choice. 

[NCperson · Accepted solution]

no - you do not have the option of deferring .  all transactions are to be reported in the year they occur.  That is stated in the Form 1040 instructions 

[tc333]

Thanks!

[VolvoGirl]

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 68 middle of last column:
"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…  <a rel="nofollow" target="_blank" href="http://www.irs.gov/pub/irs-pdf/p550.pdf">http://www.irs.gov/pub/irs-pdf/p550.pdf</a>

[tc333]

Believe that I should have stated more clearer.  I have been carrying over the long term capital loss for past few years and was deducted $3000 each year.  I have some long term capital gain this year and thought that I could still chose to deduct/reduce $3000 of the carried over long term capital loss and pay the tax on the long term capital gain for this year.

[VolvoGirl]

Yes if you still have a loss after the gains.  But remember the gains will use up more of your carryover.  Then you can still take up to a 3,000 Loss after you cover the gains.

[tc333]

Sounds like that the loss will always offset against the gains first, before the loss can be reduced by $3000 against the regular income, then carryover.  Thanks!

[VolvoGirl]

Yes.