BOBOT
Recycles dryer sheets
- Joined
- Aug 17, 2006
- Messages
- 480
Is there a limit to how long you can carry forward a loss for the purpose of offsetting future gains, i.e. use some this year, some next, some x yrs from now?
Thx...
Thx...
Is there a limit to how long you can carry forward a loss for the purpose of offsetting future gains, i.e. use some this year, some next, some x yrs from now?
Thx...
AFAIK, the IRS regulations do NOT say you "must" use a capital loss carryover against gains, instead the wording is of the "can" and "may" variety. Under that wording, if in 2012 you have carryover losses from prior year(s), rather than apply them against 2012 gains, you can save the losses into tax year 2013 when they will be more valuable as gain offsets if tax rates rise as currently scheduled.
I do not think that is true... if you do not use them for the current year, there is nothing to start with the next... IOW, you use the previous years tax return to calculate how much loss carryover you have...
But I could be wrong....
+2I do not think that is true... if you do not use them for the current year, there is nothing to start with the next... IOW, you use the previous years tax return to calculate how much loss carryover you have...
But I could be wrong....
"
In order to carry forward you need to enter them on schedule D and that forces them to be used first to offset current year gains.
Actually, the regulations don't say you must do that to carry the losses forward. I've done such skip-a-year carryovers before, and the IRS did not question them. Since it means I'm paying more tax in the current year, they seem to be content.
That is the same guidance I have gotten from the IRS. In fact, I have had TaxAide returns adjusted when the preparer put in a carryforward loss that did not reconcile to the prior year. The IRS sent the taxpayer a letter. In that case, we amended the prior year return to include the carryforward and then submitted this to the IRS along with an explanation for the current year.Just because the IRS did not question it does not mean you are doing it correctly...
You might not be paying all taxes due since you might have had to waste $3,000 of loss on a year when you did not pay taxes at all....
As an example, the definition for basis includes a deduction for depreciation 'allowed or allowable'.... if you took too much depreciation in previous years, you can not say that your basis is higher because I should not have taken depreciation.... and if you did not take any depreciation, well, tough luck, it was 'allowable'... so, if you sell an asset you might have to recognize recapture of depreciation which you never took...
Edit to add.... Just checked again.... and the form from the IRS say to use the loss from the last years tax return to bring forward the loss with no reference to previous years... so, if you did not put that loss on for a year, then from what the IRS says you lose it for all years going forward...
I hope you do not get audited and find out that you lost carryforward losses just to try and save a buck...
I agree it does sound unusual. If you read the IRS regs you may be surprised like I was.
Is there a limit to how long you can carry forward a loss for the purpose of offsetting future gains, i.e. use some this year, some next, some x yrs from now?
Thx...
I agree it does sound unusual. If you read the IRS regs you may be surprised like I was.
AFAIK, the IRS regulations do NOT say you "must" use a capital loss carryover against gains, instead the wording is of the "can" and "may" variety. Under that wording, if in 2012 you have carryover losses from prior year(s), rather than apply them against 2012 gains, you can save the losses into tax year 2013 when they will be more valuable as gain offsets if tax rates rise as currently scheduled.
Seems like an easy check for the IRS, so getting away with it lends a little credibility to your assertion. Good luck, but I'm not trying it.
from p. 70 pub 550:
"When you figure the amount of any capital
loss carryover to the next year, you MUST take
the current year’s allowable deduction into account, whether or not you claimed it and whether. or not you filed a return for the current year."