Losses
(Homes, Stocks, Other Property)
This is archived information that pertains only to the 2002 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.
How much am I allowed to deduct as a capital loss this year?
Your allowable capital loss deduction for any tax year, figured on Form 1040, Schedule D (PDF), is limited to the lesser of: - $3,000 ($1,500 if you are married and file a separate return), or
- Your capital loss as shown on line 17 of Schedule D.
If you have a capital loss on line 17 of Schedule D that is more than the yearly limit on capital loss deductions, you can carry over the unused part to later years until it is completely used up. Refer to Publication 17 (PDF), Your Federal Income Tax, or Tax Topic 409, Capital Gains and Losses, for additional information.
References: I have capital losses of $4,000. How much may I deduct this year?
Your allowable capital loss deduction for any tax year, figured on Form 1040, Schedule D (PDF), is limited to the lesser of: - $3,000 ($1,500 if you are married and file a separate return), or
- Your total net loss as shown on line 17 of Schedule D
If you have a total net loss on line 17 of Schedule D that is more than the yearly limit on capital loss deductions, you can carry over the unused part to later years until it is completely used up.
For more information about capital gains and losses, refer to Publication 544 (PDF), Sales and Other Dispositions of Assets.
References: Is the loss on the sale of your home deductible?
The loss on the sale of a personal residence is a nondeductible personal loss.
References: As a result of a bankruptcy, the bank foreclosed on my house. Can you tell me where and how to report this loss on my taxes?
The foreclosure or repossession is treated as a sale or exchange from which you, the borrower, may realize gain or loss. However, if you realize a loss on personal use property, such as your residence, the loss is not deductible. Refer to Publication 544 (PDF), Sales and other Dispositions of Assets, and Publication 908 (PDF), Bankruptcy Tax Guide, for more information.
References: I own stock which became worthless last year. Can I take a bad debt deduction on my tax return?
If you own securities and they become totally worthless, you can take a deduction for a loss, but not for a bad debt.
The worthless securities are treated as though they were capital assets sold on the last day of the tax year if they were capital assets in your hands. Report worthless securities on line 1 or line 8 of Form 1040, Schedule D (PDF), whichever applies. In columns (c) and (d), write "Worthless." For additional information, refer to Publication 550 (PDF), Investment Income and Expenses (Including Capital Gains and Losses). For more information on bad debts, refer to Tax Topic 453, Bad Debt Deduction.
References:
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