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    Jack925's Avatar
    Jack925 Posts: 1, Reputation: 1
    New Member
    		  
    #1

    Oct 9, 2007, 07:15 AM
    2005 Option Losses
    Hello,

    I have incurred some substantial losses on options trading in 2005. I have NOT reported such losses when I filed my 2005 taxes.

    Can I deduct any portion of those losses now?

    Thank you,
    Jack
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #2

    Oct 9, 2007, 07:54 AM
    Jack:

    Option losses are normally considered to capital transactions claimed using Schedule D.

    All losses are used to first offset similar gains (short against short and long against long).

    Then long gains/losees are offset against short gains/losses.

    If there are losses after that, you can then claim the losses against ordinary income. However, there is a $3,000 LIMIT on claiming these losses against ordinary income. Anything in excess of $3,000 is carried ofrward to future years, where the process described above starts over.

    So, if you have losses in 2005, you will have to amend BOTH your 2005 and 2006 tax return.

    If you need help doing this, contact me at [email protected].
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