Tax help with capital loss carryover

[CReinhold]

I tried calling the IRS and I was transferred to 3 different people and even the “complex issues department” had never heard of Form 6781 or the $3000 loss limitation rule. I’m not joking. They told me I need to talk to a “tax professional.”

I trade emini futures part time. I have another full time job. In 2007, I had a capital loss of $4766.36. In 2008, I had a loss of $791.90. In 2007, I did write down my full loss amount on Form 6781 but deducted it to the $3000 limit myself and calculated the 60/40 split off of that.

When filling out 2008 schedule D, I am expecting to fill out the calculated 60/40 split of my 2007 carryover loss of $1766.36 on lines 6 and 14 but my carryover loss worksheet says that I should have zero dollars in both short term and long term. Is this right or should I disregard this worksheet?

I have read online that I cannot offset my 2008 capital losses with my 2007 capital loss carryover. I need to offset my 2008 ordinary income with the 2007 capital loss carryover. How/where would I do this and how is this any different?

So basically my questions are, can I carryover my excess loss in 2007 of $1766.36 to 2008? If so, how do I do this?

The last guy I talked to suggested that I fill out the forms based on how I FEEL they should be, and then include an addendum letter stating how I got those figures. I hope to figure this out so I don’t have to try and find an accountant that has a clue about futures and so I can learn this for next year.

I appreciate any help.

 

[CReinhold]

sorry for the duplicate post, when i posted this last night, it said it didn't go through because my account was in the queue to be authorized.

 

[Surdo]

Quote from CReinhold:

So basically my questions are, can I carryover my excess loss in 2007 of $1766.36 to 2008? If so, how do I do this?

Enter your 2007 carryover on Sched. D Line 6 & 14.
Just split the carryover 60/40 for LT vs ST CG's.

**I pay my CPA to sign the return, well worth it, and deductible!

 

[Free Thinker]

Quote from CReinhold:

I tried calling the IRS and I was transferred to 3 different people and even the “complex issues department” had never heard of Form 6781 or the $3000 loss limitation rule. I’m not joking. They told me I need to talk to a “tax professional.”

I trade emini futures part time. I have another full time job. In 2007, I had a capital loss of $4766.36. In 2008, I had a loss of $791.90. In 2007, I did write down my full loss amount on Form 6781 but deducted it to the $3000 limit myself and calculated the 60/40 split off of that.

When filling out 2008 schedule D, I am expecting to fill out the calculated 60/40 split of my 2007 carryover loss of $1766.36 on lines 6 and 14 but my carryover loss worksheet says that I should have zero dollars in both short term and long term. Is this right or should I disregard this worksheet?

I have read online that I cannot offset my 2008 capital losses with my 2007 capital loss carryover. I need to offset my 2008 ordinary income with the 2007 capital loss carryover. How/where would I do this and how is this any different?

So basically my questions are, can I carryover my excess loss in 2007 of $1766.36 to 2008? If so, how do I do this?

The last guy I talked to suggested that I fill out the forms based on how I FEEL they should be, and then include an addendum letter stating how I got those figures. I hope to figure this out so I don’t have to try and find an accountant that has a clue about futures and so I can learn this for next year.

I appreciate any help.

tax software does all of these calculations for you.

 

[CReinhold]

Quote from Surdo:

Enter your 2007 carryover on Sched. D Line 6 & 14.
Just split the carryover 60/40 for LT vs ST CG's.

**I pay my CPA to sign the return, well worth it, and deductible!

so the fact that my loss carryover worksheet says that my carryover is zero, doesn't matter because I do technically have 1766 that are elligible for carryover?

the calculations are easy. i just don't understand the point of the loss carryover worksheet.

 

[nkhoi]

just pretend it was 2008 loss and add it in as a current year amountl, the total amount is still subject to 3k max, it makes no diff if it is a carry over or not.

 

[Bob111]

**I pay my CPA to sign the return, well worth it, and deductible!

it is deductible but also subject to 2% floor..so..unless you making couple hundred bucks a year in trading or your CPA charge you 10-20K for return-then it maybe considerable deduction..other than that-it's useless(at least for me)

 

[JackR]

Quote from CReinhold:

In 2007, I had a capital loss of $4766.36. In 2008, I had a loss of $791.90. In 2007, I did write down my full loss amount on Form 6781 but deducted it to the $3000 limit myself and calculated the 60/40 split off of that.

When filling out 2008 schedule D, I am expecting to fill out the calculated 60/40 split of my 2007 carryover loss of $1766.36 on lines 6 and 14 but my carryover loss worksheet says that I should have zero dollars in both short term and long term. Is this right or should I disregard this worksheet?

I have read online that I cannot offset my 2008 capital losses with my 2007 capital loss carryover. I need to offset my 2008 ordinary income with the 2007 capital loss carryover.

If I understand what you did I think your 2007 return is incorrect (but your tax paid was OK). The rules state that you must apply long-term losses against long-term gains and short-term losses against short-term gains. Then apply L/T against S/T. You appear to have applied $3,000 of your Regulated Futures losses directly against your earned income. This is incorrect as it does not properly allocate the 60/40 split of the $4766 ($2860/$1906). You should have entered these two numbers in the long and short-tem blocks of your Schedule D. You would have added them back together and then taken the $3000 maximum.

However, you would have used the $1906 S/T loss completely. On the L/T side you would have used $1094, leaving a L/T carryover of $1766.

So you have a L/T carryover of $1766 this year and no S/T. Your Worksheet should show that amount but if you took $3000 off the top things are messed up from a Worksheet perspective. You need to fill out a 6781 Form again this year. Do the split and apply. You'll end up with a L/T loss carryover for next year once you do your Schedule D.

I'd just enter the L/T $1766 in Sch D, Block 14 and go from there. But verify what I outlined above.

Remember the advice you get here on ET is free and it may be worthless.

Jack

 

[JB3]

I'm not sure what you did in 2007, but you should have split the loss into 60/40, and put each of those figure into your loss carry over in the LT and ST line respectively. Take your $3000 loss out of your ST line (if it exceeds the ST line, then you take it out of the LT line), and then carry over the rest to your 2008.

So remember to always take from the ST line, then LT. I'm sure you'll be fine.

 

[CReinhold]

Quote from JackR:

You need to fill out a 6781 Form again this year. Do the split and apply. You'll end up with a L/T loss carryover for next year once you do your Schedule D.

I'd just enter the L/T $1766 in Sch D, Block 14 and go from there. But verify what I outlined above.

Jack

This all makes sense except one point. When I fill out my 6781 this year and do the split, why will I end up with a L/T loss carryover next year since my current $1766 carryover + my $791.90 loss of 2008 is less than $3000? Next year, I should not have any loss carryover... correct?

Again, thank you for the help.