Capital Loss in Trading

rweworld · #1 (**permalink**) 02-27-2008, 02:04 AM

Hi,

I have purchased and sell stock and options in 2007. In that I have made loss of $1200. Can i report this as capital loss. I don't have any gain this year.

1099B form i received from my broker just shows value in Box2 Stocks, Bonds, ect = $240 But does not shows any value in Box 8 = Profit or loss Realized in 2007.

Is this mistake ? Do i need another/ corrected 1099B from my broker?

Thanks for your help,

R

TaxGuru · #2 (**permalink**) 03-06-2008, 08:17 PM

1 .Yes, you can and must report this capital loss, as it will provide a tax deduction for you against your regular taxable income, subject to the loss limitation requirements. In your case, you would be able to claim $1,200 losses for the tax year 2007!

2. Regarding the 1099B, this would not show the net gain or loss, but only the proceeds. You have to provide the Cost basis for the sale of the Stock. Clearly, you sold your position for $240 and this is the only AMOUNT that is REPORTED on the FORM 1099B. It will not provide the gain or loss realize from that transaction. So, the 1099B report you received is correct!

However, it is possible in 2008 that the IRS is requesting that information from the Brokerage Firms.

rweworld · #3 (**permalink**) 03-25-2008, 08:55 PM

Hi,

Is it possible to carry forward losses of last year (2006) into this year's (2007) filing or current year's (2007) to next year filing to make up to maximum $3000 Capital loss.

Off course I'm talking about non reported losses only. i.e. Combined loss for two years losses into single year.

Thanks for your help,

R

TaxGuru · #4 (**permalink**) 03-27-2008, 10:06 AM

In general, you can only carry over the losses into the following year provided these losses, that are in excess of $3,000, cannot be absorbed by capital gains in the year of the loss.

Any capital losses up to the extent of $3,000 can be deducted in the year sustained, and need not be absorbed by capital gains. Thus, if you have capital losses of less than $3,000 they must be deducted in the year of the loss from your adjusted gross income. They cannot be carried over to the following year if you have an AGI in excess of $3,000.

If you have Net Capital Losses (Capital Losses exceed Capital Gains) in excess of $3,000, the excess of the losses of course can be carried over to the following year and these would be combined with any losses sustained in the following year.

I hope that this provides clarification to your answer.