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Tax Law (Questions About Taxes)/Capital gains carryover - Fiscal Cliff prep

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Question
Hi John,
Thanks for helping me with this issue.
Question 1: If I have a Capital Gains carryover loss of (for example):
Short term loss carryover $10,000
Long Term loss carryover $20,000
If this year I have a Long Term capital gain of $25,000, will it use up the Long Term balance of $20,000 and then pickup the balance of $5000 from the Short Term carryover?
Question 2: Let's assume I have a Long Term carryover of $20,000. This year, say, I have a potential $100,000 Long Term Gain, if I cash out of everything. Will the $20,000 carry over bring the taxable gain to $80,000.
I am using the Turbo Tax online quick calculator to try to determine how much more Long Term Capital Gains I can cash out before I hit the 15% taxes bracket. Is it true that I don't need to worry about the first $20,000 because it is already negated by using the $20,000 carryover I had?
Thank you very much,
Dave

Answer
Bob,

Thanks for your question.

Correct on both counts. In 1, you offset the LTCL against the LTCG, then the STCL against the LTCG.

In 2, the loss carry forward reduces your taxable gain.

The difference in your taxable income and the top level of the 15% bracket is the amount of additional capital loss that would be subject to the zero rate.  

You might keep and eye on what Congress does, it is possible the rate will increase next year for all income levels.

Hope this helps.

John Stancil, CPA

Tax Law (Questions About Taxes)

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John Stancil, CPA

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I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at www.mybaldcpa.com. I also offer seminars and consultations to churches and clergy on their tax issues at www.churchtaxsolutions.com Also visit my blog, www.thetaxdocspot.com. I am listed on Tax Connections at https://www.taxconnections.com/profile/John-Stancil/12258973 Prepare and file your own taxes at www.1040stancilcpa.com

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I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

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FICPA, NATP, NCPE Fellowship, Lakeland Business Leaders

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The CPA Journal, Florida CPA Today, Green Consumer, Green Business, Global Sustainability as a Business Imperative, Palmetto Review, NATP TaxPro Quarterly, Mustang Journal of Finance and Accounting.

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DBA University of Memphis MBA University of Georgia BS in Accounting Mars Hill University

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