Capital loss carryover

[shnurgle]

What is the name of your state? NY

Quick question about statute of limitations on capital loss carryover. If in 2004 I exceeded $3,000 in net capital loss, but didn't carry any of the excess over in 2005 (because I didn't need it to get a full refund that year), am I now eligible to carry over that excess loss from '04 to use with my 2006 federal return? i know that you can continue to carry capital loss over year after year until it is used up, but what if you skip a year? Is it still yours to use?

Thanks for your help.

[abezon]

You can only carry forward the amount that would have been left over if you had claimed your capital losses in 2005. Do a capital gains carryover worksheet using your 2005 numbers & ($3,000) for the dedcutible capital loss.

[Bruno]

Could you please confirm this with my real numbers? I am in a similar situation. If I had $10,000 loss carryover for 2006 and did not use any because of other deductions and not enough taxable income, then I can only use $7,000 loss carryover for 2007 even though I never used any ($0) for the prior year (year 2006). Is this correct? And if I continue not to use any losses for the next 4 years, then after those years, I would have lost all my carryover deductions. Is this correct? Because this could happen to me in the next few years. Thanks!

Scenario:
06 not used - carryover ($10,000)
07 not used - carryover ($7,000)
08 not used - carryover ($4,000)
09 not used - carryover ($1,000)
10 not used - carryover ($0)

[LdiJ]

Originally Posted by Bruno

Could you please confirm this with my real numbers? I am in a similar situation. If I had $10,000 loss carryover for 2006 and did not use any because of other deductions and not enough taxable income, then I can only use $7,000 loss carryover for 2007 even though I never used any ($0) for the prior year (year 2006). Is this correct? And if I continue not to use any losses for the next 4 years, then after those years, I would have lost all my carryover deductions. Is this correct? Because this could happen to me in the next few years. Thanks!

Scenario:
06 not used - carryover ($10,000)
07 not used - carryover ($7,000)
08 not used - carryover ($4,000)
09 not used - carryover ($1,000)
10 not used - carryover ($0)

Its not that simple. You have to calculate it using ALL of the numbers from your tax returns using the worksheet. No one here can do that for you.

[shnurgle]

This is very frustrating. I realize now that if I had bothered to carryover my 2004 excess to 2005, my refund last year would have been considerably higher. Now that I didn't bother to do that, not only was my refund last year less, but I'll never be able to use those deductions again. So I basically threw money in the trash.

Take heed from this cautionary tale folks, ALWAYS carry over your capital losses from the year prior. I'll never make that mistake agan.

[tranquility]

Amend the return(s).

[shnurgle]

Right, just discovered this glorious option on the IRS site. for those who don't know, you can ammend any previously filed federal return up to 3 years after the file date.

I won't be able to carryover my '04 loss to '06, but i don't need to. I can now ammend my '05 return and get that extra greenage I should have been suckling on since last year.

regards,
Lord Smiddick (of the Treasury)

PS: Have you guys seen that picture of Paul Hogan standing naked in front of the Bellagio in Vegas? If and when you get around to checking it out, let me just say, addy suke my brothers, addy suke.

[Bruno]

You can amend your state as well. State terms may vary. For CA, it is 4 years. I have done amends so many times, and I've had no problems.

Back to my question. Let's forget about the numbers. My core question is this: If I don't use losses for 2006, then in 2007 I cannot carry over the same amount left over from 2006. I need to subtract $3,000 as though I have used the maximum amount in 2006. If I used just $100 from carryover losses in 2006, then would I still be forced to subtract $3,000 as though I have used the maximum amount in 2006? Basically, use your full $3,000 (max) for any given year, or you would lose the whole amount ($3K). Is this correct?

[tranquility]

Kinda. $3,000 is the number above your gains.

[abezon]

For the last time, we cannot tell you what your carryforward losses are without a complete copy of your tax return. You probably lose $3000 of losses whether you claim them or not, but there are all kinds of situations where you 'claim' a $3000 loss on your 1040 & then get to carry it forward, too. Go to the IRS web site, search for 'capital loss carryforward' & print out the worksheet. Then get out your return & plug in the numbers.

[Bruno]

Actually, my situation can be simplified as follows:

I have a spreadsheet to do my returns and test different scenarios. It is accurate to a dollar compared to online tax engines but more customizable (I am a software designer). But I must enter correct data manually to get correct results. For that, I need to know the rules (business logic). For 2006, I entered all the numbers (IRA deduction, tax and credits, exemptions, income ... everything. Capital gains & losses for the year from all other transactions are zero). Now I have $10,000 carryover from 2005. And I already have -5,802 for taxable income. So if I entered -$3,000 for capital loss, which I can, then I would get -8,802 for taxable income, which is a larger negative income (useless). So I cannot use $3,000 to meaningfully reduce my taxable income for 2006. My question was, since I need to skip 2006, can I carry the same $10,000 forward to 2007 (even though I have not used any of it in 2006 to reduce my taxable income)?

In a similar but a bit different scenario, let's assume I have a positive taxable income for 2006. In this case, my spreadsheet indicates if I used $500 from my carryover $10,000, then I would have no taxable income for 2006. So I use $500 of my carryover to reduce my taxable income to zero. My question is, since I only use $500 from $10,000 (carryover from 2005) in 2006, can I carry $9,500 forward to 2007, or I am allowed only $7,000 (losing $3,000 no matter what. Actually, $2,500 in this scenario since I have already used $500)?

Thanks!

[LdiJ]

Look, you are simply not listening. Go get the darned worksheet and then you might understand what people are trying to explain to you.

[shnurgle]

Tataglia,
There are three quick and easy ways to calculate your short and long carryover:
1. fill out the worksheet yourself using your sched D from last year (most painfull method)
2. go to this website where you can use their online worksheet (much simpler and accurate) [url]http://www.fairmark.com/capgain/carryover2004.htm[/url]
3. If you use a tax software like TurboTax, simply "transfer" last year's return data over to this year (there'i a 1-click option for this). All your cap loss excess will be automatically carried over to this year's return.

Now, back to the matter at hand my brothers. Paul Hogan at the Bellage...

[abezon]

Originally Posted by Bruno

Actually, my situation can be simplified as follows:

Now I have $10,000 carryover from 2005. And I already have -5,802 for taxable income. . . . My question was, since I need to skip 2006, can I carry the same $10,000 forward to 2007 (even though I have not used any of it in 2006 to reduce my taxable income)?

If you have negative taxable income, you need to file the return! You may have a net operating loss, your IRA contribution may be limited, & you may get to carry forward the entire $10k capital loss from 2005. But if you don't file a return, the IRS will automatically assume that you could have used $3000 of losses this year & let you carry only $7000 into 2007. How do you convince the IRS that you didn't get any benefit from the capital losses? File a 2006 reutrn!

[Bruno]

I am going to file a return, and I must file a return. I did not say negative Gross Income. I said negative 'Taxable Income.' One must file 1040 if 'Gross Income' is over $8,450 and file Form 540 (CA) if AGI is over $11,271 for 2006. So your answer implies I can carry over $10,000 to 2007 (even if I am not using or deducting $3,000 for 2006). But this is not what was advised to the OP at the beginning. Also, as far as I can recall, there is no provision in the worksheet for skipping a year. And that was the core question: if a year is skipped claiming the allowed $3k (even though the return is filed), then what, is that $3K for that year lost or it is still in the pot and can be carried forward?