| Deducting Suspended Losses |
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bokun
New Member
Cash: $ 0.70
Posts: 3
Joined: 01 Sep 2005
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| Deducting Suspended Losses |
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Hi...I'm looking for input on the following situation:
I sold my rental property, on which I had suspended losses.
I had a long term gain on the property sale, including depreciation recapture.
I had both long term and short term capital loss carryovers from prior years (stock losses)
So I am under the impression that I am allowed to deduct all my suspended losses, since I have sold the property. I also understand that I must first apply these suspended losses against any passive income I have. So my question is, first, is capital gain from the sale passive income, and therefore must I first apply the suspended losses against the capital gain resulting from the sale, and then deduct any leftovers against ordinary income? Or can I wipe out the capital gain from the property sale FIRST, using my capital loss carryovers from other activities in prior years, resulting in no net gain from the sale, and THEN deduct ALL of my suspended losses against ordinary income?
thanks for any insights...
bokun
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Mon Sep 12, 2005 1:47 am |
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BlankenshipFP
Money Talk Advisor
Cash: $ 79.56
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Joined: 05 Oct 2004
Location: Illinois
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Long-term Cap Losses are deducted first from LTCG.
STCL are deducted from STCG.
Net STCL (or STCG) is added to net LTCL (or LTCG).
If there is remaining loss, this is deducted from ordinary income, limited to $3,000 per year, with the rest carrying over.
If there is remaining gain, it is taxed as it's holding class is defined - i.e., LTCG is at the lower rate, STCG is taxed as ordinary income.
Regarding your question about passive income - this refers to rentals, royalties, and the like. Capital gains are not passive income.
Hope this helps -
Jim Blankenship, CFP�, EA
Blankenship Financial Planning, Ltd.
www.BlankenshipFinancial.com
Standard IRS Circular 230 Notice Applies
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Tue Sep 13, 2005 3:32 pm |
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