Carrying forward a net capital loss
You cannot deduct a net capital loss from your income but you can carry it forward and deduct it from capital gains in later years. There is no time limit on how long you can carry forward a net capital loss.
How long can I carry forward capital losses?
You can carry over capital losses indefinitely. Figure your allowable capital loss on Schedule D and enter it on Form 1040, Line 13. If you have an unused prior-year loss, you can subtract it from this year's net capital gains.
Do capital losses get carried forward?
Capital losses that exceed capital gains in a year may be used to offset ordinary taxable income up to $3,000 in any one tax year. Net capital losses in excess of $3,000 can be carried forward indefinitely until the amount is exhausted.
Where are capital losses carried forward on tax return?
You may use the Capital Loss Carryover Worksheet found in Publication 550, Investment Income and Expenses or in the Instructions for Schedule D (Form 1040)PDF to figure the amount you can carry forward.
How do you use capital losses from previous years?
To apply your net capital losses of other years against your taxable income, enter the amount you are claiming as a deduction on line 25300 of your 2021 income tax and benefit return. Special rules apply if you have a balance of unapplied net capital losses from before May 23, 1985.