982 Discharge of debt.

I don't know whether this "effects" the capital loss carry forward, but it does affect the carry forward to 2012 (assuming you are talking

2011 here). Any capital losses not used up in the COD year have to be reduced dollar for dollar going into 2012. Thus, in the simplest case, $50,000 of Capital loss carried into 2011. T uses $3,000 against ordinary income, leaving $47,000 to carry to 2012. If the discharge of debt is, say, $30,000, and the capital loss is the "first" attribute you need to reduce, you reduce the $47,000 by $30,000, yielding a $17,000 capital loss carryover to 2012.

I don't disagree but... I believe this rule does not apply to discharge of qualified real property business indebtedness and discharge of qualified principal residence indebtedness. In addition, see Line 5 of the 982 for an election that would change the answer. Lastly, (I may be wrong here.) there is a pecking order as to how you change your tax attributes. There are 3 items (lines 6, 7 or 8) that precede the adjustment for capital loss carryovers.