Question On Capital Gains/Loss Taxes

LongTimeDAFan | Oct 19, 2023 | 69 posts since 2022

I am trying to figure out my tax liability for 2023, and I am scratching my head over a capital gains question. It is not a subject I have had to deal with for a long time, as it seems I've only had capital losses to add to my capital loss carryovers for while now. So I'm either stumped, stupid or both - !

If someone can answer this, I am very appreciative. Here's the deal: If I have a $189k gain on an investment, at 15% capital gains tax, that equals $28,350 in tax. But, I have $46k in a capital loss carryover. Does the $46k capital loss carryover get subtracted from the $189k gain, or does it get subtracted from the $28k due, leaving me a carryover capital loss of $17,650?

This makes a big difference, and I don't know the answer. Nor can I figure out how to pose the question to Google. Any ideas? Thx!

Post an answer

Answers

retiredprof | Oct 20, 2023 | 13 posts since 2022

If the capital loss carryover is from prior years, i.e. not from 2023, you may be faced with a limit on how much you can carryover each year. Suggest checking with an accountant prior to assuming that you can carryover the complete loss for the current tax year.

I am not an accountant - this is from Investopedia website which confirms my impression that only $3,000 of a capital loss can be utilized for each year. (see below)

"What Is a Capital Loss Carryover? Capital loss carryover is the net amount of capital losses eligible to be carried forward into future tax years. Net capital losses (the amount that total capital losses exceed total capital gains) can only be deducted up to a maximum of $3,000 in a tax year."

sams1985 | Oct 20, 2023 | 781 posts since 2022

That’s only if applying to ordinary income , not capital gains.

LongTimeDAFan | Oct 20, 2023 | 69 posts since 2022

You are correct that only $3,000 of a capital loss carryover can be claimed each year on our taxes. And I've been claiming that $3,000 loss every year until this year, 2023, when I am finally able to use up the carryover amount from last year against my capital gains from this year.

The financial institution, product, and APY (Annual Percentage Yield) data displayed on this website is gathered from various sources and may not reflect all of the offers available in your region. Although we strive to provide the most accurate data possible, we cannot guarantee its accuracy. The content displayed is for general information purposes only; always verify account details and availability with the financial institution before opening an account. Contact [email protected] to report inaccurate info or to request offers be included in this website. We are not affiliated with the financial institutions included in this website.