Ongoing tax credit from stock investment loss

Forum|Forum|4 years ago
April 20, 2022
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I know that we can claim $3,000 max credit from loss in stock investment each year and use the additional losses in future years, but what if I make a gain in the future?

Say in 2022, I have $10,000 loss, and I can claim $3,000.

In 2023, I realize $10,000 gain, can I deduct all the remaining loss from 2022, i.e. $7,000, to my 2023 gain at once?

Thank you

Not A Product Question

rjs

Employee

A capital loss is not a credit, it's a capital loss. The portion of the capital loss that is not used in the year the loss occurs is carried over to subsequent years. The amount that's carried over is called a capital loss carryover.

The capital loss carryover is first applied against any capital gains. If that doesn't use up the entire loss, up to $3,000 will be applied against other income. If the entire loss is still not used up, the remainder is carried over to the next year.

You have no choice about how the capital loss carryover is used. It must be carried over from year to year, and used as determined by the tax laws. You cannot skip years. In your example, $3,000 of the $10,000 capital loss in 2022 must be deducted from other income (assuming that you have at least $3,000 of other income). It's not an option. The remaining $7,000 capital loss carryover from 2022 to 2023 must be deducted from the $10,000 capital gain.