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Tax Loss Question Carry Forward

Forum|Forum|2 years ago
April 10, 2024
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Tax Loss Question please

Stock A – Short position sold in 2023, $5000 profit

Stock B – Long position sold in 2023, $11,000 Loss

For tax purposes, is it considered a $6K loss for the year or is the loss limited to $3K for the 2023 tax year and the remainder carried forward?

Thank you

Best answer by VolvoGirl

If you have a net loss for the year (after you subtract the losses from your gains) you can deduct up to 3,000 (1,500 MFS) per year. The rest of the loss you have to carry over each year until it is used up. You can't skip a year. If you use Turbo Tax it will automatically carry over the loss for you.

Then in the future if you have a lot of gains you can use up more of the carryover loss. See IRS Pub 550 https://www.irs.gov/pub/irs-pdf/p550.pdf

If you use Turbo Tax next year the Capital Loss Carryover will transfer over. Or you will have to manually enter the amount. On the income page The 2023 column shows the carryover to 2024 (not your current loss for 2023). Schedule D doesn't actually show the carryover amount. To find your Capital Loss Carryover amount you need to look at your return schedule D page 2. Line 16 will be your total loss and line 21 should be a max loss of 3,000. The difference between line 16 and 21 is the carryover loss for next year.

M

Mike9241

it's a $6K loss but only up to $3K is deductible (line 7 of 1040) the balance becomes a carryover to 2024

VolvoGirlAnswer

Employee

If you have a net loss for the year (after you subtract the losses from your gains) you can deduct up to 3,000 (1,500 MFS) per year. The rest of the loss you have to carry over each year until it is used up. You can't skip a year. If you use Turbo Tax it will automatically carry over the loss for you.

Then in the future if you have a lot of gains you can use up more of the carryover loss. See IRS Pub 550 https://www.irs.gov/pub/irs-pdf/p550.pdf

If you use Turbo Tax next year the Capital Loss Carryover will transfer over. Or you will have to manually enter the amount. On the income page The 2023 column shows the carryover to 2024 (not your current loss for 2023). Schedule D doesn't actually show the carryover amount. To find your Capital Loss Carryover amount you need to look at your return schedule D page 2. Line 16 will be your total loss and line 21 should be a max loss of 3,000. The difference between line 16 and 21 is the carryover loss for next year.