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Posted by Michael B. on October 11, 2007, 10:19 pm
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I finally took a loss with a penny stock that I held over
the last 7 years. So here is my "hypothetical" situation:
I will have a 30K long term capital LOSS showing on my 2007
return
I will have a 10K short term capital GAIN showing on my 2007
return
Will the -30K + 10K = to -20K cary over for next year?
Or is it not possible to offset any long term LOSS towards
any short term GAIN?
Thanks for the feedback...
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Posted by Bill on October 12, 2007, 11:25 pm
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mystic02removethisplease@verizon.net (Michael=A0B.) posted:
> I finally took a loss with a penny stock that I
> held over the last 7 years. So here is my
> "hypothetical" situation:
> I will have a 30K long term capital LOSS
> showing on my 2007 return
> I will have a 10K short term capital GAIN
> showing on my 2007 return
> Will the -30K + 10K =3D to -20K cary over for
> next year?
> Or is it not possible to offset any long term
> LOSS towards any short term GAIN?
You will find that, as the Schedule D reporting of capital
gains is worked through, there comes a point where you are
directed to _combine_ the results of the short- and
long-term sections. That _combining_ will result in your
long-term loss offsetting the smaller, short-term gain. The
remaining long-term loss will be carried forward (and you
should take care to make special note, so it is "remembered"
when the next year's return is prepared).
As the long-term loss carryover is worked down -- with at
least $3,000 useable each year, even against ordinary income
-- it may offset either/or short- and long-term gains. If,
however, at some point the loss carryover is _less_ than
either the long-term or the combined short- and long-term
gains, then it will be used _first_ to reduce the long-term
gain. Therefore, similar tax-advantaged income is the first
offset.
Bill
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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Posted by joetaxpayer on October 12, 2007, 11:25 pm
Please log in for more thread options Michael B. wrote:
> I finally took a loss with a penny stock that I held over
> the last 7 years. So here is my "hypothetical" situation:
>
> I will have a 30K long term capital LOSS showing on my 2007
> return
>
> I will have a 10K short term capital GAIN showing on my 2007
> return
>
> Will the -30K + 10K = to -20K cary over for next year?
>
> Or is it not possible to offset any long term LOSS towards
> any short term GAIN?
Close. If the above is all you have, the $20K loss is taken
as $3K against ordinary income (!) and $17K is carried
forward. The sequence is to first net long term losses again
long term gains, then short against stort, then netting what
remains as I did above.
The $17K loss, if you have no further gains will be used up
as $3K per year against ordinary income until it's used up.
JOE
www.blog.joetaxpayer.com
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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Posted by Seth on October 12, 2007, 11:25 pm
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> I finally took a loss with a penny stock that I held over
> the last 7 years. So here is my "hypothetical" situation:
>
> I will have a 30K long term capital LOSS showing on my 2007
> return
>
> I will have a 10K short term capital GAIN showing on my 2007
> return
>
> Will the -30K + 10K = to -20K cary over for next year?
You also get to use 3K against ordinary income this year, so
17K loss carries forward.
Seth
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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Posted by ed on October 12, 2007, 11:25 pm
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> I finally took a loss with a penny stock that I held over
> the last 7 years. So here is my "hypothetical" situation:
>
> I will have a 30K long term capital LOSS showing on my 2007
> return
>
> I will have a 10K short term capital GAIN showing on my 2007
> return
>
> Will the -30K + 10K = to -20K cary over for next year?
>
> Or is it not possible to offset any long term LOSS towards
> any short term GAIN?
You must enter these transactions on Shedule D and take
$3,000 of the loss on 1040line 13. Then the remaining
$17,000 carries over on the Capital Loss Carryover
Worksheet. Yes, your long term loss will offset short term
gains if there are no other gains or losses involved.
ed
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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