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November 16, 2023
Question

California Capital Loss Carryover

  • November 16, 2023
  • 1 reply
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Bottom line: Is there something I should have been doing to avoid this "bug" in the California LT Cap Loss Adjustments?

For federal returns:

"Your capital loss carryover is reduced by the amount of capital loss that was actually used to reduce your taxable income, not by the amount of capital loss deduction shown on your tax return."

My ~$-3400 Schedule D long term capital loss has been carried to 1040 as -$3000 for several years without it decreasing the next year because of negative AGIs. My loss had not been "used."

California, however, seems to be "adjusting" my CA Capital Loss Carryover by $3000 every year draining it in six years, all while the IRS knows there is no benefit for California to "Adjust." It would be one thing for California to just eat it the first time because they differ on "usage" of the loss but to make a -$3400 loss delete $18000 in carryovers is obviously wrong and certainly no one's intent.

Is there something I should have been doing to avoid this "bug" in the California LT Cap Loss Adjustments?

1 reply

Employee
November 16, 2023