What comes first, writing off Capital Gains against Capital losses or...?

What comes first, writing off Capital Gains against Capital losses or zero tax because I'm in the 10% tax bracket. I don't want to use my Capital Losses, if I'm paying zero taxes anyway. (other than $3,000 a year)

Mikek

Reply to
amdx
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Offsetting losses against gains is done first. The tax rate, whether it's zero or higher, applies to the NET gain after offsetting losses and gains. Keep in mind that the zero tax rate applies only to net long-term gain, not to short-term gain.

The only way to not "use" losses is to not have the loss in the first place. Don't sell any investment that you have a loss on in a year that you don't want the loss to go on your tax return. Once you have sold at a loss, or if you have a carryover loss from previous years, you have to show the loss on your tax return and "use" it, even if it doesn't reduce your tax.

Bob Sandler

Reply to
Bob Sandler

I've got a large capital loss going back many years and at $3k a year, another 15 years going forward.

Thanks for the clarification, even though it's not the answer I wanted. :-)

Mikek

Reply to
amdx

Well, in this case, you can try to generate capital gains and use up the loss more quickly. The $3k/year is only the limit of losses usable against other income once you have already offset any capital gains.

Even if you don't necessarily want to get rid of particular assets, you could always say, sell stock or mutual funds and buy them back immediately. The wash sale rules only apply to sales at a loss, not at a gain. That would then reset your basis and let you pay for a smaller gain in the future when you do want to completely sell.

Reply to
taruss

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