Sold mutual fund shares in 2008, all at a loss. Do I need to report them on the tax form?

Posted by Leo on January 27, 2009, 11:46 am

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Hi,

I sold some mutual fund shares in 2008. All of them were sold at a
loss. I do not have any capital gains that I can use these losses as
an offset. So, as far as I understand it, reporting these losses on my
tax form will not change my tax liability in any way.

Does it make sense for me to even bother and report all these sales?
Is it required by law to report the mutual fund share sales to IRS
even if there's no tax liability on them?

Thanks.

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Posted by Paul Thomas, CPA on January 27, 2009, 12:00 pm

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> I sold some mutual fund shares in 2008. All of them were sold at a

> loss. I do not have any capital gains that I can use these losses as

> an offset. So, as far as I understand it, reporting these losses on my

> tax form will not change my tax liability in any way.

> Does it make sense for me to even bother and report all these sales?

> Is it required by law to report the mutual fund share sales to IRS

> even if there's no tax liability on them?

Yes, you must report the sales amount, less your cost basis, so that the IRS
knows what your loss is. Otherwise they'll issue you a notice fixing your
mistake and demanding the tax on the gross sales of the mutual fund.

In other words, they don't have the foggiest idea that you incurred a loss
till you report that loss on a Schedule D filed with your return.

In addition, that loss will partially off-set current year income by as much
as $3000, with the remainder being carried forward to off-set any capital
gains and then another $3000 against regular income till the total losses
are gone. It could take years, but that little amount of work done today
will provide years of decreased taxes in the future.

--
Paul A. Thomas, CPA
Watkinsville, Georgia

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Posted by rick++ on January 27, 2009, 1:24 pm

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> I sold some mutual fund shares in 2008. All of them were sold at a

> loss.

> Does it make sense for me to even bother and report all these sales?

> Is it required by law to report the mutual fund share sales to IRS

> even if there's no tax liability on them?

Most definately file for 2008. Under current tax laws you can use
losses to offset future gains and income indefinately until the losses
are used up. Right now its $3000 offset per year against non-gain
income. (McCain proposed raising this amount in his presidental
platform.)
Theres a line in Schedule D for propogating previous years' losses.

I personally canceled gains taxes in 2003-2005 from 2001 losses.
Very nice.

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<< ------------------------------------------------------- >>
<< 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. >>
<< ------------------------------------------------------- >>

Posted by Leo on January 28, 2009, 7:08 pm

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> > I sold some mutual fund shares in 2008. All of them were sold at a

> > loss.

> > Does it make sense for me to even bother and report all these sales?

> > Is it required by law to report the mutual fund share sales to IRS

> > even if there's no tax liability on them?

> Most definately file for 2008. Under current tax laws you can use

> losses to offset future gains and income indefinately until the losses

> are used up. Right now its $3000 offset per year against non-gain

> income. (McCain proposed raising this amount in his presidental

> platform.)

> Theres a line in Schedule D for propogating previous years' losses.

> I personally canceled gains taxes in 2003-2005 from 2001 losses.

> Very nice.

Excellent and very valuable replies - thank you both!

--
<< ------------------------------------------------------- >>
<< 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. >>
<< ------------------------------------------------------- >>

Posted by mort on January 28, 2009, 7:11 pm

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>> I sold some mutual fund shares in 2008. All of them were sold at a

>> loss.

>> Does it make sense for me to even bother and report all these sales?

>> Is it required by law to report the mutual fund share sales to IRS

>> even if there's no tax liability on them?

> Most definately file for 2008. Under current tax laws you can use

> losses to offset future gains and income indefinately until the losses

> are used up. Right now its $3000 offset per year against non-gain

> income. (McCain proposed raising this amount in his presidental

> platform.)

> Theres a line in Schedule D for propogating previous years' losses.

> I personally canceled gains taxes in 2003-2005 from 2001 losses.

> Very nice.

At $3,000 per year I will die long before I use up my losses.
Unless... the stock market ever goes up! Naw, not likely.

--
<< ------------------------------------------------------- >>
<< 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. >>
<< ------------------------------------------------------- >>