mank172002[at]yahoo.com (mank) wrote:

- quote -

You are limited to $3,000 of net capital gains to offset
ordinary income, in any one year. The excess losses are
carried over to the next and future years. They are there
used to first offset any capital gains in that year, then
$3,000 is used to offset ordinary income. Etc, etc.

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- quote -

That is truly unfortunate.

Capital losses are deductible against capital gains in full.
Any excess loss is limited to a $3000 deduction against
income in any one year with the unused loss carried forward
to the next year.

Therefore, unless you have gains to offset against the loss,
you will only be able to deduct $3000 this year against your
income.

Tax refunds are limited to the amount of withholding and
estimates that you have paid into the system.

Hope that helps.
Bruce Raskin, CPA
Small Business and Individual Tax and Accounting Services

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mank wrote:

- quote -

Hmm--there are a number of misunderstandings here and I
don't know where to begin.

First, "tax refunds" generally aren't gifts from the
government. Rather, they represent simply a return of your
overpaying them taxes during the year (we'll ignore the EIC
for now <grin> ). So what you are looking for is whether the
losses will reduce your income.

Second, the general "limit" on a tax refund for any year is
the amount you paid in (ignoring EIC).

Third, capital losses are limited--you can only offset them
against capital gains. After that, you are limited to only
using an "excess" $3,000 per year and then carrying any
excess forward to use in the future against either capital
gains and/or your $3K per year extra.

So if you have no capital gains, you will get a $3,000
reduction in your income when computing your tax. And the
rest will come forward.

I would suggest you might want to seek some paid
professional tax advice to help you determine where you
stand tax wise for 2004.

--
Ed Zollars, CPA
Phoenix, Arizona

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"mank" <mank172002[at]yahoo.com> wrote

- quote -

The ~maximum~ capital loss you can take each year (after
off-setting any capital gains) is $3000. The actual tax
savings from the $3000 deduction will vary some what as that
$3K reduces your other income. It looks like you will need
20 something years or a banner investing year to deplete
your losses.

Tax refunds are generally limited to the amount you have
withheld, the amount you paid in estimated tax, and any
refundable tax credits. It don't get much bigger than that.

--
Paul A. Thomas, CPA
taxman at negia.net

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mank172002[at]yahoo.com (mank) wrote:

- quote -

The size of your refund is the amount you overpaid your
taxes through withholding and estimated taxes. It seems
very unlikely that you'll have more than $22,000 withheld
from a salary of $78,000. What I think you're really asking
is whether the losses will reduce the tax you owe by
$22,000, right?

The first thing you do is combine your capital losses and
gains. If you have a net loss, you can use the first $3,000
as a deduction against ordinary income. The rest of the
capital loss is carried forward to the next year, when you
do the same thing. You keep doing that every year until you
use up all the losses or you die.

--
Barry Margolin, barmar[at]alum.mit.edu
Arlington, MA

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- quote -

Unfortunately, no!! You may deduct up to $3,000 in losses.
Any excess is carried over to future years until they are
offset by new gains or time (at $3,000 per year, unless the
law changes).

"Jack" - John H. Fisher - TaxService[at]aol.com
Philadelphia, Pa - Atlantic City, NJ - West Wildwood, NJ
My Newsgroups & Boards at: http://members.aol.com/TaxService/index.html

Where Ignorance is bliss, 'tis folly to be wise!=

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"mank" <mank172002[at]yahoo.com> wrote:

- quote -

Boy are you in for some unhappy times!

Capital losses from the sale of investments is limited to
$3,000 per year beyond any gains. So if you had losses of
$70,000 you get to deduct $3,000 and carry $67,000 forward
to use next year. If next year you have $67,000 in gains
from the sale of other investments you can use the carried
over loss to offset that so you don't have to pay any tax.
But you can't deduct more than $3,000 of capital losses in
any one year.

Gene E. Utterback, EA

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mank172002[at]yahoo.com (mank) posted:

- quote -

Sorry, capital losses can be used in their entirety only to
the extent they are offsetting capital gains. Otherwise,
only $3,000 can be used each year to offset ordinary income.
[See Schedule D instructions.]

The good news is that you can carry forward any capital
losses that you weren't able to use, and this will continue,
until you have used _all of the loss. There is a capital
loss carryover work sheet that you should complete -- and it
is my practice to attach that to the front of any paper
return copy. This helps the TP to remember there's leftover
capital losses, when they start to prepare the next year's
return. (Also helps alert professional preparer about the
unused carryover.)

The best result might be realized if you are more fortunate
in some future investment ... because your large carryover
might be used to erase tax liability on much of that gain.
(But don't take this as advice to make wild investments --
because, as you may have already learned, you can also just
keep on losing.)

Bill

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Unfortunately I suffered a huge loss on stocks this year.
Around 70,000 dollars from the sale of stocks purchased last
year and sold this year and then again 35,000 dollars again
in few another transactions. I have an annual salary of
78,000 dollars. Will I be able to get $22,000 (20% of
capital losses)tax refunds next year??? Is there any limit
on tax refunds ?

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