I have a very large capital loss in 2008.
Next year I can apply use it against any capital gain, and then $3,000 of it against ordinary income. Repeat until used up. Is that correct?
So, until I use up my 2008 capital loss, there is no difference between long and short term capital gains; they both net out against the carryover the same.
Is that correct?
snipped-for-privacy@lccn.com (mort) posted:
Not quite. As covered in another current thread in this group, you must fill out the Capital Loss Carryover Worksheet (included with Schedule D instructions). That segregates short and long term loss carryovers.
For future years, the Worksheet will cause the "ST" carryovers to be used first against ST losses ... but as for the $3,000 deduction against ordinary income, that will apply as long as there are any carryover losses.
You must do the Worksheet, and I would recommend you staple a copy of it to the front of your paper return record, so when you get ready to prepare the following year's return, you'll be prompted to include carryover data in your computations -- and continue to use the Worksheet, until you've used all of that carryover.
BTW, welcome to the club of those with large carryovers. Alas, I also took a bath inside my IRA, where it does me no good at all.
Bill
Just to add... that $3000 depletes the short-term losses first, so that if you had both $9000 of ST and $9000 of LT losses, you will carry over $6000 of ST and $9000 of LT losses.
And that matters in the final year, when your CG exceed your carryover CL, since it controls which CG are cancelled out.
Seth
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