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so it is better to run out the capital loss at 3k per year than to offset the loss with gains that would not be taxed anyway.

Except you don't have a choice. Capital loss carry forwards are used to offset any and all capital gains first, and only after that do you use any additional losses to offset ordinary income @ $3k/year. So if you've already sold the property, the capital loss will be used towards that gain first. If you haven't already sold the property, then you can continue to use the carry forward to offset ordinary income at $3k/year, after any other capital gains have been accounted for.

That said - capital loss carryforwards are accounted for on Line 7 of your 2020 1040 https://www.irs.gov/pub/irs-pdf/f1040.pdf - before your AGI is calculated. Your AGI is calculated on Line 11 of your 2020 1040.

AJ
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Upon further reflection,the ACA subsidy stops before capital gains taxes kick in for me,so it is better to run out the capital loss at 3k per year than to offset the loss with gains that would not be taxed anyway. Unless there is something I missing,which obviously just happened.


JK
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so it is better to run out the capital loss at 3k per year than to offset the loss with gains that would not be taxed anyway.

Except you don't have a choice. Capital loss carry forwards are used to offset any and all capital gains first, and only after that do you use any additional losses to offset ordinary income @ $3k/year. So if you've already sold the property, the capital loss will be used towards that gain first. If you haven't already sold the property, then you can continue to use the carry forward to offset ordinary income at $3k/year, after any other capital gains have been accounted for.

That said - capital loss carryforwards are accounted for on Line 7 of your 2020 1040 https://www.irs.gov/pub/irs-pdf/f1040.pdf - before your AGI is calculated. Your AGI is calculated on Line 11 of your 2020 1040.

AJ
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Thanks AJ.

I can wait for the capital loss carry forward to run off against regular income,
without selling anything in my taxable accounts. Most all of our income can be from IRA's, so there is flexibility as to when to recognize capital gains. Thanks as always for clarifying.
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Sorry for the repetition,and I think I understand,but examples help me to visualize results.
So let's say I have a $5000 loss carry forward and then sell stock to realize a $5000 long term capital gain. That would be reported on line 7 as $0,and therefore would not affect adjusted gross income at all.
If I do not realize a capital gain then $3000 of the loss would be realized against income,do I have that right?

JK
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So let's say I have a $5000 loss carry forward and then sell stock to realize a $5000 long term capital gain. That would be reported on line 7 as $0,and therefore would not affect adjusted gross income at all.
If I do not realize a capital gain then $3000 of the loss would be realized against income,do I have that right?


Correct. In the 2nd case, line 7 would show the ($3,000), so it's subtracted from your income.

AJ
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Thanks again AJ
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