How long do I have to keep my records for the IRS?
I had a capital loss 2 years ago ( tax year 2015) which I recorded in my tax return when I filed my federal taxes (1040). I filed the return in Oct 2016.
This capital loss was larger than the normal capital losses I incur which tend to be in the $2000 to $5000 range on a yearly basis, if any.
I cannot find the paperwork on this larger capital loss and some other docs too.
I might have a large capital gain this year. So I would like to offset this gain against the capital losses brought forward.
If I do this, will the IRS ask me to show docs supporting the carried forward capital losses from 2 years ago?
"Generally, you must keep your records that support an item of income, deduction or credit shown on your tax return until the period of limitations for that tax return runs out."
In general the period of limitations is three years. I believe, though the page doesn't say, that if you file your return late, it's three years from the date you file, not three years from April 15th.
They may. They could do so anyway, since it's less than three years since you reported the capital loss. It's just over a year since the due date for 2015 returns, so they are probably only now getting to auditing them.
If you claim a loss carryforward, I think it's prudent to keep records of the loss for three years from the due date or filing date of the return where you use that carryforward. Nowadays, with records in PDFs, you don't have to store a lot of paper.
Since you say you cannot find the documentation, perhaps you can get the investment company or whoever to re-send you the document that gave information about the capital loss. If you can't get that, should you still take the loss carryforward? If I were you, I would, since you're entitled to it. But make a concerted search for documentation, even if it's only in the form of a diary entry or some letter you wrote to someone. It's better to have that and not need it, than need it and not have it.
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