Re: Capital loss carry over


"fish" <fish-1@xxxxxxxxxx> wrote
> So the $3,000 limit only applies to a net loss of sales that year or the
> $3,000 is the max for the net of current losses and carry overs? Sorry.


Year 2001:
You make a great investment with $100,000 cash. Investment value falls to
$3 (could it be Enron?). You sell (at rock bottom). Capital loss is
$99,997. If there are no other capital gains or losses (ever) you get to
deduct $3000 against ordinary income for 33 years. You now have $96,997 in
losses to carry forward to next year.

Year 2002:
Maybe your grandfather feels sorry for you and gives you 500 shares of his
RJR/Nabisco stock he bought back when it was just RJR, his basis becomes
your basis and that's $1 a share. You seell it all for $50,500. That
$50,000 gain isn't taxed because you off-set it with $50,000 of losses, and
take another $3000 of losses against your ordinary income. You then have
$43,997 in losses to carry forward to next year.

Year 2003:
Nothing happens, you take another $3000 in losses against ordinary income.
Net result, you have $40,997 in capital losses to carry forward.........

Repeat till you use up your capital losses - or till you die.



--
Paul A. Thomas, CPA
Athens, Georgia






.

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