Capital Loss Carryover

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mbert
Posts: 15
Joined: Thu Mar 08, 2018 10:05 pm

Capital Loss Carryover

Post by mbert »

My understanding is that capital losses up to $3,000 can be used to offset wage income and the rest can be carried forward. I'm wondering if in 2015 and 2016 I had some capital losses but due to tax credits which I reported in Form 1116 I owed no taxes, can I somehow carry the capital losses from 2015 and 2016 forward? My understanding is that in a regular scenario these would just go to decrease income and therefore not be eligible to claim against capital gains in future years.
nelsona
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Re: Capital Loss Carryover

Post by nelsona »

No, you cannot carryforward the $3000 unless you *could not* deduct them, which is not your case.

If you can deduct, but do not use the deduction, then you are still required to reduce your capital loss reserve by the unused portion each year.

It may be better for you to take the deduction for those years, perhaps resulting in a reduced foreign tax credit, which you certainly CAN carry forward.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
mbert
Posts: 15
Joined: Thu Mar 08, 2018 10:05 pm

Re: Capital Loss Carryover

Post by mbert »

[quote=nelsona post_id=50155 time=1539143766 user_id=30]
It may be better for you to take the deduction for those years, perhaps resulting in a reduced foreign tax credit, which you certainly CAN carry forward.
[/quote]

I'm not sure I understand this section? I understand that you can carry forward foreign tax credits, but in this case the issue is that I have more than enough foreign income tax credits but I have capital gains in a given year which I cannot offset with foreign income tax credits?
nelsona
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Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Capital Loss Carryover

Post by nelsona »

If you had capital losses in 2015 or 2016 that were less than $3000, then no you cannot carry them forward. You must use up to $3000 starting the first year you have a net loss.

The fact that you have more foreign tax than you need does not matter in this case. Sorry.

You are used to the Cdn way, were you cannot write off losses against other income, but you can carryforward forever. Not the same for IRS.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
mbert
Posts: 15
Joined: Thu Mar 08, 2018 10:05 pm

Re: Capital Loss Carryover

Post by mbert »

Okay got it, thanks for the info, much appreciated.
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