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I boroughed some money, I invested the funds and I have a substancial short term loss
(thanks to the internuts) this year.

The only think I did not loose is my shirt and the obligation to pay back the borrowed money with interest.

Does the senario sounds familiar ?

Questions:

a.- How much of the losses can I claim
against my year's salary?

b.- Can I claim as deductable the interest
I paid for this year?

c.- For how many years can I apply the
loses I suffered this year?


Thanks
ER
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[[I boroughed some money, I invested the funds and I have a substancial short term loss
(thanks to the internuts) this year.]]

[[ The only think I did not loose is my shirt and the obligation to pay back the borrowed money with
interest.]]

Does the senario sounds familiar ?]]

Thankfully...no.

[[ a.- How much of the losses can I claim
against my year's salary?]]

Compute your net capital loss by "netting" your gains against your losses. Then you can use up to $3k to offset your other income (such as salary, interest, dividends, etc.). If your net loss is greater than $3k, then you must carry over the balance of that loss to the next tax year, to be used to offset any other gains. If no gains, you can again use up to $3k to offset other income, with the balance of the loss moving to the next tax year. And so on...and so on.

[[ b.- Can I claim as deductable the interest
I paid for this year?]]

Potentially, yes. It may be considered "investment" interest. You might want to read more about investment interest and the deductibility of same in my post on that issue in the Taxes FAQ area. In addition, IRS has a publication (Pub 550) that deals with investment interest that you might want to read. But your interest deduction will be an "itemized" deduction (so if you don't itemize, you're out of luck), and will be limited to your "net investment income". And, because of your large loss, unless you have substantial interest and/or dividend income (or other investment income), it's likely that your interest would not be available as a deduction. You can also read more about this issue in IRS Form 4952 (and instructions).

[[ c.- For how many years can I apply the
loses I suffered this year?]]

As long as you live. But if you die, those losses go with you to the grave, and nobody gets to use 'em.

We discuss capital losses and investment interest deductions in The Motley Fool Investment Tax Guide. You might want to check it out.

TMF Taxes
Roy

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[[ c.- For how many years can I apply the
loses I suffered this year?]]

As long as you live. But if you die, those losses go with you to the grave, and nobody gets to use 'em.


I do not plan to die until I get my money back. I am only 62. :-)



We discuss capital losses and investment interest deductions in The Motley Fool
Investment Tax Guide. You might want to check it out.

TMF Taxes
Roy


Roy, As an appreciation for your help, I ordered today the Inverstment Tax Guide. In addition, I am sure to answer a lot of my tax questions.

Another book!!!! How exciting.

Evangelos
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]]Roy, As an appreciation for your help, I ordered today the Inverstment Tax Guide. In addition, I
am sure to answer a lot of my tax questions.]]

You da MAN Lolos!!!

Thanks for the order. I hope you enjoy the book. I'll look forward to you providing a book review here in the folder after you've finished it.

Thanks again...
TMF Taxes
Roy
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