Question

Capital losses and passive losses not needed to reduce income because itemized deduction was so large

Forum|Forum|6 years ago
August 20, 2019
1 reply
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My mother's medical expenses were so large that she had no taxable income. She also sold an LLC that had passive losses and she also had a capital loss carryover from the previous year. Since her Schedule A deduction was so large it reduced her taxable income to less than zero and she wouldn't need to use her passive losses and capital losses to reduce income. Do her passive losses from the sale of her LLC and the previous year's capital loss carryover need to be used now or can they be deferred to the next year?

I don't see any procedure for doing this.

VolvoGirl

Employee

If you have a negative AGI or negative taxable income read Pub 550 page 66 on Figuring your Carryover. So even though it shows it on 1040 it doesn't reduce the carryover to the next year.

http://www.irs.gov/pub/irs-pdf/p550.pdf

You can see it on the Carryover Worksheet. There is a Capital Loss Carryover Worksheet showing the carryover from the prior year and the current amounts. Then there is also the Capital Loss Carry Forward worksheet showing the amount transferring over to next year.

In the Online version you have to save your return with all the worksheet as a pdf file to your computer to see the Capital Loss Carry Over and Carry Forward worksheets.

In the Desktop program you can go to Forms and find it in the list in the left column