So I am no more an optimist…at least once it comes to the stock market
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Now with the year-end once again coming up…I think this time I am surely getting rid of the dogs…
Now the question is…what is the max amount of captial loss that I can deduct from my taxable income…I think its somewhere between 2000-3000 but not sure, altough it can be carried over in subsequent years also…
Hmmm… a tax question
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You can carry forward a capital loss indefinitely.
You can off-set a capital loss against a capital gain.
You can only off-set a capital loss against your normal income to a maximum of $3,000, and the amount exceeding that has to be carried forward to future years.
Example
Lets suppose, you have
Capital loss of $50,000.
Capital gain of $20,000.
Normal income of $15,000.
Your capital loss will first be adjusted against the Capital Gain. The remaining balance is $30,000. Now you can adjust $3,000 against income income of current year. You are now left with $27,000. This you can carry forward in future years, and each year you can adjust $3,000 against normal income.
Clear?
Thanks Pristine for the detailed reply.
Capital gain for this year…whoa…who would that lucky person be
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I was’nt clear about this max amount you can deduct in one year…for sure I don’t intened generating enough losses to carry them over the next years…its just for the short-term, why not save some taxes if I can clear up my portfolio a little bit…
Oh yeah..and if anybody wants to follow this advice..beware of the wash-sale rule...
A wash-sale rule is one that if you sell a stock at a loss you cannot buy a 'similar' stock within the next 30 days, otherwise you cannot declare the capital loss..
Now the difinition of a 'similar' stock is mirky, if you buy in a different company of same sector you can make an argument that it is different but definitely not for the stock of the same company...