Carry Over Loss

$3,000 of your 2004 went on your 2004 return with the balance carried to 2005. (I can't tell from your statements how much the loss was since you show the same amount for the loss and the carryover.)

You have to amend 2005. You don't have to wait for your refund from that filing to prepare you 2006, just get the carryover right on the 2006 return.

-- Phil Marti Clarksburg, MD

No.

Yes.

-- Rich Carreiro snipped-for-privacy@animato.arlington.ma.us

You ought to amend your 2005 return, and include a worksheet calculation incorporating the $6400 carryover. That should result in some additional tax savings for 2005 ... and, based on the $600 loss you already had, there ought to be a net carryover of $4,000 remaining for 2006. Assuming you had no other capital events in 2006, the worksheet would lead you to enter a $3,000 loss on line 13, and direct you to carryover the remaining $1,000 for 2007. It is my practice to staple the "capital loss carryover" worksheet directly to the front of the file copy of the return ... so when you (or your preparer) refer to the previous year's return, you will immediately be reminded to enter that carryover in the approriate area. Bill

Amending 2005 could save you additional taxes. $3000 of the carryover offsets earned income or interest/dividend income which can have a higher tax rate than some kinds of capital gains. That is not considering the intangible cost of the time for the extra paperwork.