Realized Loss Tax Reporting?

I just recently sold two Funds that I have held for awhile and realized a $10400 loss. Some folks tell me that I cannot claim all this in the 2012 Tax Year and will

Reply to
charliec
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Yes and no. You do claim this all on form 8949 which transfers the loss to Schedule D, which then limits how much of that 10400 can be transferred to Form 1040. That limit is $3000, and unused loss gets carried to the next year.

Reply to
Arthur Kamlet

A follow up tp my own article -- the above assumes no other gains. If other gains, the gains and losses cancel, and any net gain that transfers to Form 1040 is limited to 3000.

Reply to
Arthur Kamlet

Art meant to say that any net LOSS that transfers to Form

1040 is limited to $3,000. There is no limit on a net gain.

Bob Sandler

Reply to
Bob Sandler

What Bob said. Thanks. I know better than to post so late.

Reply to
Arthur Kamlet

^^^^

I think you mean net loss is limited to $3000.

Seth

Reply to
Seth

You fill out the appropriate forms, starting with Schedule D.

So you will take your total capital gains for the year, including capital gains distributions, and subtract $10,400 from that.

If you have a gain, you will pay tax on that at capital gains rates.

If you have a loss, you can deduct up to $3000 of it this year, at regular income rates. If the loss exceeds $3000, the additional amount of loss will carry over to next year where the same process will apply.

So if you have no other gains or losses, you will get to deduct $3000 in 2012, $3000 in 2013, $3000 in 2014, and $1400 in 2015.

It does create an incentive to postpone gains. If you had something you wanted to sell at a profit, you'd prefer to let the losses run out (getting the deduction at your tax bracket level) then take the gains later, paying tax on them at capital gains rates. This assumes that your tax bracket is higher than the capital gains rate, and that you can in fact postpone selling appreciated assets. A lot of people have loss carryovers that will last them several lifetimes. Congress has often considered raising the $3000 limit, but I wouldn't bet on it anytime soon.

Reply to
Hank Youngerman

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