1040X for Schedule D carryover incorrectly filed in 2000

I had the amount gain $60,000 of long and short terms from the stock market in 2007. And I have filed the extension for 2007 return. I had the loss $13,000 in 2000 and claimed the loss in Schedule D and
deducted $3000 for the year 2000’s tax return. But the 2000’s loss ($13000-$3000 = $12700) have never been carried for the years after 2000. I did not trade till 2006, I lost $17,000 for 2006 and I did not claim the loss on the 2006 return.
After having the 2000’s trades rechecked I have realized that I had lost $30,000 instead of $13,000 which had been reported to IRS. I understood IRS would not allow us file AMENDED 1040x before 2005 due to the 3 years statue.
But I want to subtract the correct loss of 2000 and the loss of 2006 from the gain made in 2007. And pay IRS what I owe. I would like to file 1040x for the correction on the Schedule D of 2006 with the loss from 2006 and the loss carried over from 2000. And I will attach all the document such as 1099, transaction records. Will IRS accept the correction on 2000’s?
TIA
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Math error. After your 2000 return you had a $10,000 capital loss carryover.
Legal error. You don't get a choice regarding when you use the carryover. Whether you traded or not during the ensuing years, if you had enough income from other sources you used the carryover as follows:
2001: $3,000 used, $7,000 remaining 2002: $3,000 used, $4,000 remaining 2003: $3,000 used, $1,000 remaining 2004: $1,000 used, zero remaining
It's too late to file amended returns for any of those years unless the original was filed less than 3 years ago (possible for a 2004 filed on extension).

Amend your 2006 to claim the loss and establish your carryover. If you don't the IRS is going to be after you for tax on the gross proceeds of the sale(s).

Correct
I want to hit the lottery. Neither of us is likely to succeed.

No. It's too late to change your 2000 return. Amend the 2006 reporting your 2006 sales, then proceed with the resulting carryover to 2007.
If during the intervening years since 2000 you had negative taxable income after applying that year's $3,000 carryover you might have more of the 2000 carryover left as of 2004, but it's too late to change the amount of the 2000 loss.
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Phil Marti
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No, it isn't. It's too late to get a _refund_ for the amendment.

No. He can file, just not get a refund.

He's more likely.
He'll have to refile every year from 2000 on, using up $3,000 of the capital loss carryforward each year.
Seth
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And Phil responds: "I want to hit the lottery. Neither of us is likely to succeed."
I think just the opposite. (No, Phil, you won't hit the lottery) I think that alphaga can change his returns, no matter how much time has passed. The three-year statute of limitations prohibits *getting a credit or refund* from amending a return. It does not/should not stop you from correcting mistakes on returns, especially when they affect your carryovers to subsequent years.
I didn't pay enough attention to alphaga's details to be able to tell him exactly what he can do about correcting the earlier year losses, but I'm pretty sure that he can amend "early* returns, and that he *should* amend them, when the changes will affect - favorably affect - *later* returns. Be prepared, however, to defend the earlier years' returns, if the IRS challenges them!
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"LoTax" wrote:

Since it appears we've all done the same amount of research (none) I have no problem agreeing to a "why not?" approach to amending 2000, the only "closed" year in which the capital loss realized during the year was misstated. IRS accepts it or doesn't, and OP proceeds as he wishes.
I see no point to amending returns that didn't use the carryover if no refund for those years is possible because it's barred by statute. Seems to me that OP could just do a worksheet adjustment to the carryover for those years to carry him to the point that refunds from amended returns would be allowed.
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Phil Marti
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Phil Marti wrote:

I agree with Phil. The loss carryover (appears to be $10,000) from 2000 has been absorbed by 2001, 2002, 2003 and 2004. There is no need to amend those returns as the end result is no change to taxes paid. The OP starts with the 2006 loss. If 2006 did not include a $3000 loss, then 2006 should be amended to account for the $3000 loss and obtain a refund. Carryover loss to 2007 is $14,000.
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But didn't the OP say that "After having the 2000’s trades rechecked I have realized that I had lost $30,000 instead of $13,000 which had been reported to IRS." Some of these $30,000 of losses look like they should carryover to 2007 from 2000, even with "absorption" in the intervening years....
And also, I said he could and should refile - amend - his "intervening" year returns. Phil said he couldn't, which I disagree with. Whether he has to or not is still, I think, up in the air.
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I think he should: otherwise, when his returns are examined, a Capital Loss Carryforward will "appear" out of thin air (that is, not on the previous year's return).
On the other hand, amending the last non-refundable year will mostly avoid that. (The amended return will have the sudden appearance, but the refund can't be made so it might not receive much scrutiny. Subsequent years will appear consistent.)
Seth
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LoTax wrote:

Yes, I missed that fact. He should amend 2000 to reflect the correct loss and the correct loss carryforward to 2001 (appears to be 27000).
I see no need to amend the closed years of 2001 thru 2004. Those years just suck up $12,000 of the $27,000 loss. That leaves a $15000 loss carryforward to 2005. He should amend 2005 to take his $3000 loss, as that year is still open, and carryforward the remaining $12000 loss to 2006. He should amend 2006 to pick up his 17000 of losses, deduct $3000 and carryforward the remaining loss of $26000 to 2007.
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It might make sense to amend 2004 if the person is a resident of California. They allow four years to file an amended return, so you can at least get back the California portion for that year, if not the federal. I don't know about other states.
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Since long term capital loss need to be entered on Schedule D, won't he have to file an amended 2001 return on order to carry over to 2002, etc., etc., until the present (if anything is left to carry over).
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"Ernie Klein" wrote:

To me it boils down to a question of what establishes the carryover that goes on the current Schedule D. Is it the loss itself, with the annual application of it from the loss year to present, or is it the annual reporting of it on Schedule D?
Again noting that I haven't researched this, it seems to me that once the loss carryover is established and reported on Schedule D for the loss transaction year its future application is set. Thus, in a year in which there were no Schedule D transactions, the application of $3,000 to other income (and the corresponding reduction in carryover loss to the next year) happens whether it's reported on Schedule D or not. (The same would be true if there were Schedule D transactions.)
If the taxpayer neglected to take advantage of that $3,000 and the year in question is closed, I don't see the point of filing an amended return which can't claim a refund just to account for the carryover. You can do that on a piece of paper to come up with the amount to put on the Schedule D being filed or (timely) amended.
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Phil Marti
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snipped-for-privacy@hotmail.com (LoTax) writes:
| I think just the opposite. (No, Phil, you won't hit the lottery) I | think that alphaga can change his returns, no matter how much time has | passed. The three-year statute of limitations prohibits *getting a | credit or refund* from amending a return. It does not/should not stop | you from correcting mistakes on returns, especially when they affect | your carryovers to subsequent years. | | I didn't pay enough attention to alphaga's details to be able to tell | him exactly what he can do about correcting the earlier year losses, | but I'm pretty sure that he can amend "early* returns, and that he | *should* amend them, when the changes will affect - favorably affect - | *later* returns. Be prepared, however, to defend the earlier years' | returns, if the IRS challenges them!
What if amending a closed year would have a favorable effect on later returns but would result in a higher tax in the closed year?
                Dan Lanciani                 ddl@danlan.*com
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If amending a closed year results in a higher tax, it has to be paid (with interest and maybe penalties). The 3-year limitation is one-way.
Seth
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"Seth" wrote:

That one I have researched, and you're flat-out wrong. If assessment is barred by statue IRS cannot assess even if you file an amended return. And if they cannot assess they cannot apply money to the account even if you pay. (You could always send it off to pay off the national debt.)
We had a discussion of the issue some time ago in this forum regarding amending an estate tax return after the assessment statute was closed.
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Phil Marti
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Doesn't the statute start again from the filing of the amended return? That's what I would have thought, anyway, but I can see how it could be the way you describe it, too.
Stu
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"Stuart A. Bronstein" wrote:

No. If the assessment statute is still open and an amended return is filed the statute is held open n days after the amended return filing (I don't know the exact number, but it's not a full 3 year assessment statute) to allow time for processing. If the amended return is filed after the assessment statute for the original has expired, there can be no further assessment.
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Phil Marti
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Thank you for the correction.
But in some cases, it's beyond the 3 years I can claim a refund, but still within the assessment period for the IRS, right? (e.g. If it's within 6 years and I restate my income with a 30% increase.)
Seth
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"Seth" wrote:

I haven't looked at this recently, but IIRC, the refund and assessment statutes do not run in tandem. IOW, there are cases in which IRS has longer than 3 years to assess deficiencies, but the taxpayer doesn't have the same amount of time to claim a refund. Of course, if the IRS assesses additional tax under such a statue the taxpayer can pay it and claim a refund within 2 years of payment even though all is well beyond the original statute.
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Phil Marti
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Phil Marti wrote:

Check Pub 552 "Recordkeeping for Individuals", it spells out in a table what the time limitations are if you don't file a return or understate your income by a certain percent.
-Mark Bole
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