cap gains & losses

[BOBOT]

We're in the 15% bracket for the 1st time this year, & won't owe cg tax on the gains we realized in January (sold C & MER- aren't we geniouses).

But we have losses on some funds, & I'm wondering about taking some of them to offset regular earned income. Question: to get the full 3000 offset allowed do we just realize 3k in losses, or 3k in addition to the amount of gain we have?

 

[ziggy29]

But we have losses on some funds, & I'm wondering about taking some of them to offset regular earned income. Question: to get the full 3000 offset allowed do we just realize 3k in losses, or 3k in addition to the amount of gain we have?

Capital losses are first used to offset capital gains, and only after capital gains are entirely offset do you offset ordinary income.

For example, if you had a $2000 gain and then a $10,000 loss, the first $2,000 would be used to offset the capital gains. Then you could offset $3,000 of ordinary income, and the remaining $5,000 would be carried forward into 2009.

If you had a $2000 gain and a $3000 loss, again the first $2000 would offset the capital gains and only $1000 would offset ordinary income.

 

[SteveL]

Since you are in the 15% bracket, and your long term CG rate for 2008 is zero, trying to offset ord income is a bit futile. You must have enough CG losses to offset your existing 2008 CG before you will affect ord income. It might be better to wait till January and then you will harvest any losses directly against ord income for 2009.