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1. Is there a statute of limitations on capital gain offsets? Can I offset a 2007 capital gain with a 2004 capital loss?


2. Can I show the carry forward of the capital loss on the 2007 Schedule D, even though I didn't file a Schedule D in 2005 and 2006? Can I add a page of explanation instead?

I don't know the answer to this question, but it's probably NO

3. If I have to file the Schedule D's for 2005 and 2006, to show the capital loss carryover, how should I do this? I wasn't able to find a 1041X (trust amended return) to correspond to the 1040X (regular amended return). The capital loss makes no difference to

the tax owed in these two years, since there were no gains to offset it.

Use a regular 1041 and mark it Amended Return in Box F at the top of the form under the Name Box. For instructions go to page 16 of the instructions. You will have to complete a Schedule D (1041) and refigure all the applicable entries and add entries for the carryover capital loss on the amended 1041.

Do that for both years and you can use the carryover loss UNLESS you hade retained any income in the trust in which case you would have to use the loss to offset up to $3,000 of it each year.

Good luck

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