Hi I am not a local so I am not familiar with the US's tax system. I was just talking with my friend about tax with regards to stock.

Let's say I lost $6000 in capital last year in stocks. My friend was saying that the government would reimburse you in the tax equivalent to your capital lost up to $3000 per year. So let's say I incur $3000 in taxes this year, but because I lost $6000 in capital last year, I would not have to pay any money this year and the next as well assuming I get taxed $3000 again next year. If in the event I don't incur any taxes, the governtment would still "owe" me the $6000 indefinitely. So I can still write off the $3000 per year say 10 years from now.

Is that true? If so please post a link for me and if no please do so as well. Thanks!

 

I think I remember that any losses you might incur can only be used to offset any gains you may have enjoyed, lowering the taxes on the gains.

 

Yes I understand that. I just went to a website and they have FAQs saying that the situation I described as well as yours is true, meaning loses can be used to offset the gains. And if there are more loses than the gains, the loses can be carried over to next year and be subsequently applied.

My next question is how long can this offset be carried over into future years before it is wipe off by the government.

[Edited by nwk00 on 04-16-2001 at 02:15 PM]

 

It offsets your taxable income, not the additional tax you owe.
There is a big difference.

 

The losses offset gains, then to the extent losses exceed gains, they offset other income up to $3,000 (of income, not taxes.) The remaining losses are carried-forward to the next tax year and again offset gains, use another $3,000 against other income and keep going until completely expired. Remember losses must be recognized - that is the stocks must be sold, cannot be "paper" losses.

The losses are carried forward until you use them up or die.

 

I see. Does anyone know why the government is so "kind" to us?

 

We is them and they is us. We are being kind to ourselves!!!

 

[QUOTE]Originally posted by MJMSC
[B]We is them and they is us.

 

Nice?
What do you mean nice?
If they are going to tax me on the gains, it's only fair that my gains should be offset by ALL loses and beyond, THIS YEAR.