Deferred losses

Forum|Forum|1 year ago
March 8, 2025
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KeshaH

Can you give us a little more information to better assist you?

- What type of deferred losses are to referring to? (Capital losses, business losses, passive activity losses, etc)

- Are these losses from a previous tax year that you're looking to carry forward to you 2024 tax return?

- Did you have any capital gains this year that you're hoping to offset with previous losses?

- Are these losses related to investments, real estate, or a business activity?

- Have you already reported losses on previous tax returns?

- Are you wondering about the limit on how much you can deduct this year?

Getting these details will help us provide a helpful response about how to properly handle deferred losses.

hollcassAuthor

I have carryover losses and right now Etrade shows me with $34k in gains, but $90k in deferred losses. When I upload to Turbo Tax, it just shows me the $34k gain. Will it, at some point, let me take or carryover the deferred losses or not?

Thanks,

Greg

AmyC

Employee

Yes, when you are allowed and able to enter it correctly. A deferred loss happens when you have a wash sale. The deferred loss is added to the basis of the stock that was repurchased. It is your responsibility to ensure you keep up with your basis.

For example:

Buy ABC 100 shares for $4,000 - date irrelevant

Sell ABC 100 shares April 1 for $2,000 0 could be a $2k loss

Buy ABC 50 shares April 28 for $1,200

A purchase between April 2 and May 1, that is 30 days either side of the sale, you have a wash sale. So the wash is added to the basis and the most recent purchase is your purchase date.

However, only half the shares were purchased a second time. So half is a loss and half is a wash (deferred loss). The outcome here is:

$1,000 loss on 50 shares bought and sold
$1,000 wash is added to the basis of the new stock, new basis is $2200 and purchase date is the new one 4/28.

I want to urge you to create a financial notebook that is kept separate from your tax return. Keep it safe and each year, add your year-end statements from all your financial accounts plus a copy of your W2’s, your carryover information, and proof of your basis in your various investments. You must keep tax records from the time you purchase until sold/ loss used plus 3 years. It is very easy to lose track of disallowed losses, wash sales, carryforwards, and basis. This can be a digital or paper notebook.

Reference: About Publication 550, Investment Income and Expenses

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