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Can I deduct a Long Term Capital Loss from my Income Taxes?
Old 03-16-2011, 09:55 AM   #1
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Can I deduct a Long Term Capital Loss from my Income Taxes?


I prepare my own taxes and I use TurboTax. I do not itemize my deductions, taking the standard deduction is more advantageous for me. When I first started investing I purchased Invesco Large Cap Value mutual fund and Janus 20 mutual fund. I have held onto these funds for years. Overall, they have not performed well. If I sell the Invesco mutual fund shares this year, I will have a long term capital loss. I paid about $8,000 for them and they are only currently worth $5,000. If I sell them this year, can I still deduct this loss as a long term capital loss on my income taxes for 2011 even though I do not itemize my deductions?

In the past, I have only purchased additional shares of mutual funds, I have not sold a part, or all, of a mutual fund holding so I am not sure how I address the tax part of the transaction. I have only received 1099-DIVs in the past. Thank you for your advice.
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Old 03-16-2011, 09:59 AM   #2
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Capital losses in excess of capital gains can be written off up to $3,000 per year, with excess losses carried over into future years. Itemizing is not required as these are recorded on Schedule D, not Schedule A.
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Old 03-16-2011, 11:44 AM   #3
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Yes. Turbo Tax will guide you through the stock sale. As Ziggy said, you can subtract as much as $3K this year, any more would be a carry over into next year. If you use Turbo Tax again next year on the same computer, it would pick up that carry over. Otherwise you have to remember to enter it onto schedule D next year.

Mutual funds -- most companies will calculate your basis for you when you sell. Otherwise you'd have to go back and find what you paid for the shares, adding any dividends or cap gains distributions that you reinvested. This can get complex if you bought over time and/or reinvested divs and distributions, or sell only part. I think I had to do this for a smaller mutual fund that I bought through Ameritrade, but any I've bought thru Vanguard, American Century, etc, calculated the basis for me.
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