tax question

if say i lost 10k last year, wrote off 3k as tax deduction, with 7k loss left. this year i made 7k profit. Will the 7k from last year fully carry over to this year and even things out?

Or will i be only able to deduct the max 3k and need to pay tax on the remaining 4k (7-3)?

thanks

 

The whole loss carries over and evens out the gains this year. If you still have losses that aren't offset with gains you can continue to take 3k against income each year until its all used up.

 

For some reason, I get the feeling that this ain't so. If you trade stocks, I'm pretty damn sure that this is complete bogus. If you trade futures, however, you need to elect §475 M2M in order to carry forward Old Capital Loss as a loss on Schedule D.

But I ain't no expert on this matter so be sure to talk to your tax accountant.

 

100% correct.

 

This is incorrect.

A capital gain is a capital gain. If you have a carry over capital loss then any capital gain from anywhere will offset that carryover loss. You are limited to $3k per year to use up your carryover loss against ordinary income. No futures trader, who plans on staying in business, would choose to elect marked to market because you lose the preferential tax treatment which is significant.

 

ok i guess the question is:

1) You have 7k loss carry over from last year
2) You made 7k profit this year.

What will your total taxable capital gain be this year?

A) 0 (7k loss from last year evens out 7k gain from this year)

B) 4K taxable gain (Even though you have 7k carryover loss from last year, you can deduct a max of 3k per year, so 7k gain this year minus 3k max carryover loss from last year, nets you 4k taxable capital gain)

Is it A or B?

i know those are questions for tax accountants, but to be honest i dont trust any of those idiots from hr block etc..to do my taxes related to trading. Dont have a lot of luck finding a good local tax accountant

 

0

 

A) 0 (7k loss from last year evens out 7k gain from this year)

This is correct!

 

Your question has been answered by the last two posts. For example, if you have a 10k carryover loss and make 10k in capital gains in the current year then that nets to zero; if your gain happened to be 5K then that nets to a 5K loss of which 3k can go to offset ordinary income and 2k would be moved over to the next year’s taxes.
I would just add that if you use tax software it should handle it for you.

 

thanks guys!