Capital Gains and Losses - Line 18

[FirstYearWithALoss]

What does SMALLER mean?

Forgive me for what I'm sure many of you will consider a dumb question, perhaps a picky question, but when I took Algebra in the 9th grade, -4,000 was a smaller number than -3,000. Still is. I'm 99.9% sure of the answer but just would like a verification.

On line 17a I have a negative 4,000, i.e., a loss.

On line 18, the form says ...
If line 17a is a loss, enter ... the SMALLER of (a) that loss (negative 4,000) or (b) negative 3,000.

A $3,000 loss is a smaller loss than a $4,000 loss but the number on line 17a (-4,000) is smaller than -3,000.

Someone tell me, that ... Yes, the IRS wants -$3,000 and they should have been more explicit when it came to the word SMALLER. They should have said that they wanted the figure with the SMALLER ABSOLUTE VALUE or the figure that represented the SMALLER LOSS and not left the word SMALLER out there naked, all by its lonesome self.

 

[Cut-Throat]

I don't know the answer to your question, but I quit doing my own taxes about 18 years ago. I don't do my own root canals either.

One of the best things I ever did and I'm sure I'm money ahead as my tax preparer advises me of quirks every year that appears on the forms. I know the first year that I used him, I saved $1400. Paid his fee for many years to come.

I used to get in such a bad mood just reading the information booklet and filling out the forms.

Do yourself a favor and get a tax preparer next time and save yourself the grief!

 

[renferme]

a $3000 loss is smaller than a $4000 loss.
$3000 is the max. amount you can deduct in any one year. In your case, the extra $1000 loss has to be carried forward to next year.

 

[renferme]

or have your wife buy the tax cut software, it's cheap,
and have her plug in the numbers. That's how we did it at my house.

This was the first time in many years that I didn't have to do the tax prep. work. This wife is terrific !

 

[unclemick]

Yup -3k max loss and carryover the rest. My bad habit is to rough out my taxes every year and then take it to the accountant(same one for 15+ yrs.) - usually makes me grumpy and then relieved when completed.

I also get to SWAG div./mergers/spinoffs/cap gains every 3 months and send IRS my estimated tax payments.