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Financial Planning / Tax Strategies


Subject:  Re: Capital Gain/Loss Date:  9/18/1998  3:19 PM
Author:  Bob78164 Number:  5386 of 127512

fpcjlc writes (in part):

Is there a $3K loss limit each tax year. What if you took a captial gain of 50K in June reinvested in July and got out in August with a $75K Loss. Can I claim a 25K capital loss?

I reply:

Unfortunately, there is a $3000 limit on the amount of capital losses you may use to offset ordinary income. Any losses you cannot use must be carried over to future years. In your case, assuming that you have described your only two capital transactions for the year, you have a net capital loss of $25,000, of which you may use $3000 to offset ordinary 1998 income, and must carry over $22,000 to future years. If you have other gains that you contemplate realizing, you might want to do so this year, so as to use the entire loss this year, but be careful not to let the tax tail wag the financial dog. Good luck! --Bob
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