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Carryover of long term capital loss from real estate sale

Forum|Forum|4 years ago
March 29, 2022
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My wife and I sold an investment lot in 2019 and took a $201K loss (I know, lousy judgment). Turbotax for that year only applied $3000 of that loss and carried over the balance. Same thing for TT in 2020 - applied $3000 of long-term capital gain loss and carried over the remainder. But this year for some reason, TT is saying we can apply a long-term capital gain loss of $51,533. Why is that not capped at $3000 as it was in previous tax years? I cannot find anything that says the IRS policy has changed regarding that $3000 cap for couples filing jointly.

TurboTax Home & Biz Windows

Best answer by KCAZ3509

OK, maybe the light is coming on slowly. Or maybe not. On line 8a of our 2021 Schedule D, we show a total gain of $6480 for all long-term transactions reported on 1099-B. Line 9 of Schedule D shows $31,484 for all transactions reported on Forms 8949 with Box E checked. Line 13 shows $10,748 of capital gain distributions for 2020. So the total of all of our capital gains is $48,715 for 2020. The long-term capital loss carryover from 2020 into 2021 is -$158,786. That is apparently used to offset all of those other capital gains in 2021 (the ones totaling $48,715), leaving us with a net long-term capital loss of -$110,070 (line 15 of Schedule D). Line 21 of Schedule D shows the allowable additional long-term capital loss of -$3000 from our carryover.

Then the Capital Loss Carryforward Worksheet does some fancy footwork and reduces that $3000 by $182, so our long-term capital loss carryforward into 2022 will be $110,070 - $3000 + $182, or $107,252 (line 13 on the worksheet). If that is correct, and I think I see what TurboTax did, then we are using a large chunk of our carryover loss from 2020 to offset new capital gains in 2021, plus we are using another $2818 of that capital loss ($3000-$182) to use a total of $51,533 of capital losses in 2021, reducing our carryover loss of -$158,785 from 2020 into 2021 by that same $51,533 and yielding a carryforward loss into 2022 of -$107,252, getting most of the $3000 allowable capital loss credit (minus the $182).

Am I close? If so, thanks very much for your help in pointing me in the right direction about offsetting other capital gains. Kevin

M

MinhT1

The tax rules have not changed.

You may have a capital gain distribution reported on a form 1099-DIV and this gain can be offset with the capital loss carried forward.

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K

KCAZ3509AuthorAnswer

OK, maybe the light is coming on slowly. Or maybe not. On line 8a of our 2021 Schedule D, we show a total gain of $6480 for all long-term transactions reported on 1099-B. Line 9 of Schedule D shows $31,484 for all transactions reported on Forms 8949 with Box E checked. Line 13 shows $10,748 of capital gain distributions for 2020. So the total of all of our capital gains is $48,715 for 2020. The long-term capital loss carryover from 2020 into 2021 is -$158,786. That is apparently used to offset all of those other capital gains in 2021 (the ones totaling $48,715), leaving us with a net long-term capital loss of -$110,070 (line 15 of Schedule D). Line 21 of Schedule D shows the allowable additional long-term capital loss of -$3000 from our carryover.

Then the Capital Loss Carryforward Worksheet does some fancy footwork and reduces that $3000 by $182, so our long-term capital loss carryforward into 2022 will be $110,070 - $3000 + $182, or $107,252 (line 13 on the worksheet). If that is correct, and I think I see what TurboTax did, then we are using a large chunk of our carryover loss from 2020 to offset new capital gains in 2021, plus we are using another $2818 of that capital loss ($3000-$182) to use a total of $51,533 of capital losses in 2021, reducing our carryover loss of -$158,785 from 2020 into 2021 by that same $51,533 and yielding a carryforward loss into 2022 of -$107,252, getting most of the $3000 allowable capital loss credit (minus the $182).

Am I close? If so, thanks very much for your help in pointing me in the right direction about offsetting other capital gains. Kevin

M

MinhT1

So, you had capital gains in 2021 which were offset by the capital loss carried over from 2020. That explains the use of your capital loss carryover. And the calculations made by TurboTax on Schedule D are correct.

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