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Thank you everyone for all the replies. One more question. I am sure I can I apply the carryover capital losses from previous years, but is that limited to the $3000? Say I had $10,000 in losses from last year (2016) -- normally only $3000 would carry forward to this tax year? Or am I allowed to carry forward up to my capital gains of this year (2017). I hope that makes sense.

The answer is in the previous replies, so let's just put some more numbers into your example:

Scenario 1

$10,000 carry forward capital loss. Assume it's all long term.
$2,000 current LT capital gain.
$1,000 current ST capital gain.
More than $3,000 other income.

1st: $2,000 of the carry forward LT loss wipes out the current LT capital gain.
2nd: $1,000 of the carry forward LT loss wipes out the current ST capital gain.
3rd: $3,000 of the carry forward LT loss offsets other income.
4th: $4,000 of the carry forward LT loss gets carried forward another year.


Scenario 2

$10,000 carry forward capital loss. Assume it's all long term.
$15,000 current LT capital gain
$1,000 current ST capital gain
more than $3,000 other income.

1st: $10,000 carry forward LT loss nets with current LT capital gain, for 5,000 capital gain.
2nd: no change to $1,000 ST capital gain
3rd: no change to other income
4th: no remaining loss to carry forward

Note that in Scenario 2, if you are in the 15% tax bracket you have wasted a capital loss carry forward wiping out capital gains that would have been taxed at 0%. Know your own situation.

Patzer
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