We have a LT loss carryforward. Until now, we've just been applying the $3000 cap, against ordinary income. For 2012, we'll have significant capital gain, but also medical deductions that would themselves be enough to nearly zero out our net income.
Can we opt to not apply the carryforward this year? Looking at the Sch D line 14 worksheet, I don't see where you would do that.
Thanks
You do not have that option. The carry forward must be used, first against net capital gains, then against any remaining ordinary income.
You must use the $3,000 loss this year, but ...
For some cases where you cannot beneficially use the entire allowed $3,000 loss, you will find that the loss carry-forward worksheet does not subtract the entire $3,000 when calculating next year's number. IIRC, you will not be "charged" for any portion of the $3,000 that makes your (AGI less standard or itemized deduction) less than zero.
Don EA in Upstate NY
George
I was asked about this elsewhere, and found that if income were $5800, wiped out by STD deduction, the $3000 carried forward. i.e. the amount carried was not decreased by the $3000. But if the income were $9500, and both STD deduction and exemption made taxable zero, $3000 of carried loss was still 'used' us and did not return to the carry-forward sheet. (I believe I answered the question using 2011 tax numbers, obviously they adjusted up a bit this year.) I'd suggest the OP verify by running the numbers through tax software. Either way, you are correct, no option to simply ignore the carry-forward for a year.
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