I had 24k short term capital loss in 2005. In 2006 I made about 20k. I was under the impression that I can only deduct 3000 dollars worth of loss from the previous year, which means I would owe taxes on 17k of 06 gains. I gave my paperwork to a trading specialist CPA who said that all my gains for 06 can be written off against the 2005 losses. I hope he is correct, but that doesn't sound right to me. BTW I did not file trader status or MM. Anyone...
Yes the CPA is right. If you claimed only $3000 in 2005 against your other income, then the remaining $21000 carried forward can be claimed against your capital gains in 2006. That will still leave $1000 of unclaimed losses you can offset againt your other income (from employment for example). If you do not have any other income, you have to carry forward $1000 to next year (2007). The limitation of $3000 applies only if you are offsetting capital losses against other income (like employment). For carried forward losses, you can claim any amount againt your capital gains for 2006 (assuming you made enough gains).
Just to be sure, you didn't specifically mention if 2006's 20k was trading income. If it's trades you can write them off one for one against losses. If it was non-trading gains (i.e. wages) then you're limited to a 3k deduction.