What to do with a net loss?

So far this year I am running a net loss; unless the stock market improves pretty dramatically, it will stay that way.

1) Presumably the issue of quarterly estimated tax payments is moot; if I don't have income for the year, there can't be a penalty. Right?

2) Can losses be carried forward or backwards?

Couldn't have come at a worse time; I am sitting on a big slug of 2007 taxes to be paid on 4/15/08. I was supposed to make money on the float, not lose money. Oh well.

Reply to
Taxlover
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Is this on paper, in which case it doesn't affect your taxes, or a loss from completed 2008 sales, in which case it does.

Right. If the only income you have is from trading stocks and you have a net loss for the year, you'll have no income tax liability, thus no estimated tax payment requirement.

If you do have other income, remember that only $3,000 of your net capital loss for the year can be applied to this year's return. The balance is carried forward to the next year's Schedule D.

See IRS Publication 550.

Reply to
Phil Marti

Thanks, I read 550. If I have $50,000 in dividends and $100,000 in capital losses in 2008, then my 2008 income is $47,000 and I have $97,000 in losses carried forward to

2009. Is that right? Well, that is certainly better than nothing; though it would be nice to be able to carry it back to 2007.
Reply to
Taxlover

That is correct.

Yes, it would be. :) But it's not allowed.

-- Rich Carreiro snipped-for-privacy@rlcarr.com

Reply to
Rich Carreiro

Are you saying you've already sold securities at a loss during these first 2 1/2 months? Wow! Let's hope the market improves before end of year, and you can sell others at a gain and come close to breaking even. might take some fancy tax planning to do this though.

ChEAr$, Harlan Lunsford, EA n LA

Reply to
Harlan Lunsford

If you are a trader and have made the marked-to-market election, then you can report all your gains and losses on Form 4797, and the wash sale rules and capital loss limitations don't apply. Also, you don't pay SE tax.

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If you made the above election and have a net operating loss, you can probably carryback or carryforward.

But some things come up:

To change your accounting method you use form 3115. What is the fee?

How to revoke the 475(f) election? You need IRS consent, but what is the fee?

Reply to
removeps-groups

Capital losses don't carry back.

Historically: Did they ever? I think I heard that they might have under the IRC of 1937.

Reply to
D. Stussy

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