Tax loss carryforward after going broke in trade?

O

OptionFool

Assume you had a $1 million trading account and you blew it up and lost $1.5 million and owed your broker $500k which you cannot pay and have to declare bankruptcy. When you list your trades on your taxes do you show a loss of $1.5 million and thus have a $1.5 million tax loss carryforward, or do you make an adjustment of 500k and just show a loss of $1 million since that is your only out of pocket loss? If so, how do you describe this adjustment? Can this adjustment be made before the discharge of the 500k judgment? Or should it be done afterward in a future year to lower your $1.5 mil capital loss carryforward down to $1 million? (and hope you live 333 more years to use it all up) :-(
 
Option_Attack said:
No prob you get to deduct $3k/yr and net the other -$1,497,000 against cap gains....For. Fkin. Ever.

Gotta luv our tax laws.
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Deduct $3K each year in perpetuity. Dude going to live 499-n years?

I know a guy who made 1MM playing poker one year, lost 1.2MM the following year in a single 100/200 NLHE HU game.
 
I would suggest that person contact www.greentradertax.com


OptionFool said:
Assume you had a $1 million trading account and you blew it up and lost $1.5 million and owed your broker $500k which you cannot pay and have to declare bankruptcy. When you list your trades on your taxes do you show a loss of $1.5 million and thus have a $1.5 million tax loss carryforward, or do you make an adjustment of 500k and just show a loss of $1 million since that is your only out of pocket loss? If so, how do you describe this adjustment? Can this adjustment be made before the discharge of the 500k judgment? Or should it be done afterward in a future year to lower your $1.5 mil capital loss carryforward down to $1 million? (and hope you live 333 more years to use it all up) :-(
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