Posted: 2/18/2008 6:08:09 PM EDT
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Hey guys, 2 years ago, I had a substantial cap loss that could easily be spread out over several years. However I didn't bother claiming that loss again last year since my tax liability was so low. However I'd like to claim it again this year. The loss was in tax year 2005 though (and it's not claimed at all on my 2006 return). Is it ok to subtract 2006's $3,000 (that comes off whether claimed or not on 2006) and claim the remainder this year? I'm hoping I don't need to file an amended 2006 return to actually show the $3,000 carryover loss. I'm realizing I'd be better off to have claimed it anyway, but live and learn. Just LMK if I'm ok filing 2007 as outlined above. Here's the note I plan on including on my Schedule D: "In tax year 2005, I realized $XX,XXX in Long Term Capital Loss. I claimed the maximum of $3,000 in loss. Although I did not claim any carryover in tax year 2006 the carryover amount decreased by $3,000, and I now have the remaining $X,XXX to claim as carryover loss from 2005." Thanks SO much! GT Edited for (some) clarity |
| It's a little more complex than that (and you need to see an accountant that is working for you), considering the netting process between long and short term cap losses/gains, but the short answer is, you can't pick and choose what year to take the loss. Amend the 2006 return and take the loss that is allowed. Why would you leave money on the table? |
Because my tax owed was $Zero. I didn't think it would matter if I claimed it since I was already getting everything back. BTW, I'm just dealing in Long Term, so that should keep it simpler. Does the IRS need my amended 06 return in-hand before I file 07? Haven't been down that road before. Thank you very much for the reply, TaxPhd! |
You owed nothing, or had zero taxes for the year? Look at line 63 on your 2006 return. Is there a number there greater than zero? Basically, the cap loss gets carried froward and used against cap gains, or $3,000/year against ordinary income. If you had no cap gain or ordinary income in 2006, none of the loss would be used, and all of it carries froward to 2007. Like most everything in tax, there is more to it than that, but that is the basic idea. |