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Posted by Seth Breidbart on March 27, 2007, 12:43 am
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> I have a buddy who told me that a capital loss carryover can
> be used to be applied towards a capital gain in later years.
> Not just the $3000 amount, but the entire amount. The
> $3000 can be applied towards ordinary income, but the full
> amount can be applied against capital gains -- which makes
> sense to me :-).
>
> Let me use an example:
> Suppose in 2003 I had a capital loss of $100,000.
> In 2006, I had a capital gain of $100,000.
>
> Does that mean in 2006, I can take the full $100,000 of
> capital gains tax free?
No, you used $3000/year from 2003 to 2005, so there's only
$91,000 left for 2006.
> i.e. use the capital loss of
> $100,000 against the capital gain of $100,000 in 2006?
You can use all of the $91,000.
> I have a similar type of situation (the numbers have been
> changed to protect the innocent :-), but in TurboTax, the
> Capital Loss Carryovers are there, but are not deducted from
> my capital gains of this year.
Are you sure they weren't applied further down the form?
> Also, does it matter whether they are long term vs. short
> term capital gains / losses?
Only a little: first, they apply to gains of the same type;
then if there's a balance, they can apply to gains of the
other type.
> And is there a maximum time
> you can do this for (or can you keep doing it until it's
> used up)?
It lasts until it gets used up.
Seth
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