big loss, 2years later big gain, breaking even == no tax?

J

just_a_qq

So I had a 6 digit loss in 2012 after investing all my money in one popular stock (you will never guess which one). Finally in 2014 that same stock has been nice to me, and I (almost) broke even. Can I convince the IRS that it is not actually a huge gain, but I am just breaking even? No way I am paying a huge tax, right?


P.S. All same year, short term trades/losses.

P.S. Reading on Capital Loss Carryover. Could you point me to the right publication/example please? Confused.
 
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just_a_qq said:
So I had a 6 digit loss in 2012 after investing all my money in one popular stock (you will never guess which one). Finally in 2014 that same stock has been nice to me, and I (almost) broke even. Can I convince the IRS that it is not actually a huge gain, but I am just breaking even? No way I am paying a huge tax, right?


P.S. All same year, short term trades/losses.

P.S. Reading on Capital Loss Carryover. Could you point me to the right publication/example please? Confused.
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I was wondering if you were going to run across the Capital Loss Carryover provision. The worksheet is provided in the Schedule D instructions. And if you qualify for it and haven't been doing it since you incurred the loss, you can submit a "corrected" (or whatever they call it; I'm having a brain glitch at the moment) return for those years in which you were entitled to it.

It's a pain in the ass, but worth doing.
 
just_a_qq said:
So I had a 6 digit loss in 2012 after investing all my money in one popular stock (you will never guess which one). Finally in 2014 that same stock has been nice to me, and I (almost) broke even. Can I convince the IRS that it is not actually a huge gain, but I am just breaking even? No way I am paying a huge tax, right?


P.S. All same year, short term trades/losses.

P.S. Reading on Capital Loss Carryover. Could you point me to the right publication/example please? Confused.
More...

since it's only 3 years ago you can refile your 2012 tax if you want but if you filed your 2012 Schedule D correctly it should showed the loss amount in 2 places short term and long term loss. For year 2013 you can take 3000 from the loss amount and use it to reduce your income. Thus your carry over loss for year 2014 is the original loss amount - 3000. If you realize the gain in 2014 then your Schedule D shows 2013 carry over loss - 2014 gain. Here is what carry over loss looks like.
scheduleD.png
 
nkhoi said:
since it's only 3 years ago you can refile your 2012 tax if you want but if you filed your 2012 Schedule D correctly it should showed the loss amount in 2 places short term and long term loss. For year 2013 you can take 3000 from the loss amount and use it to reduce your income. Thus your carry over loss for year 2014 is the original loss amount - 3000. If you realize the gain in 2014 then your Schedule D shows 2013 carry over loss - 2014 gain. Here is what carry over loss looks like.View attachment 151229
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Awesome, thank you so much! I did attach schedule D in 2012 along with the form 8949 showing the total loss and the deduction of 3000. In 2013 I filed schedule D again to include another 3000 deduction. So from your explanation it sounds pretty straightforward what I need to do this year.

Thank you again.
 
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