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If I am reading things right, I then have the option of having them cancel each other out as much as possible, or carrying forward the loss and paying taxes on the gain.

You're not reading things right. Everything, including carryovers from previous years, winds up being netted on Schedule D, and you don't have choices. Let's try this approach. Tell us exactly where you're finding this information. Please be precise so we can figure out where you're going wrong.


Sorry for bringing up a very dead thread, but I just happened across the instance that likely caused my confusion.

I must have been thinking about Investment Interest. From a yahoo article,

That said, any excess investment interest expense can be carried over to the following tax year. See IRS Form 4952 (Investment Interest Expense Deduction) for all the details (including a special election to treat long-term capital gains and dividends as investment income).

That special election, and counting some LTCG's as investment income instead of rolling forward excess investment interest, must have been what I was mistakenly remembering as Turbo Tax giving an option to keep excess short term losses away from long term gains.

While I doubt this was keeping anyone up at night, I'm glad to have stumbled across the reason for my misremembering, even if it took a few years.

Thanks for the help and corrections over the years.

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