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When to carry over a capital loss: tax tip

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in Small Business Tax,Small Business Tax Deduction Strategies

Q. I sold stock in 2011 at a $7,600 loss and offset $3,000 of ordinary income. Do I have to use the remaining loss on my 2012 return? L.M., Albu­­quer­que, N.M.

A. Yes, assuming you have enough 2012 income and/or capital gains to use up the remaining loss in that year. Presumably, you’re asking because you would prefer to save the capital loss carryover for use in 2013 or another later year. But the tax law requires you to apply the loss carryover to the next tax year, even if the carryover  isn’t as beneficial as it would be in a later year.

Tip: There’s no limit on how long a capital loss can be carried over. So if you had insufficient income and/or capital gains in 2012 to use up the entire 2011 carryover, the remaining carryover can be used after 2012.

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