[lake]

I have had a loss on the sale of stock. I understand I can only claim 3000 per year. Does this mean I can deduct the entire 3000.00 or is it a percentage of the 3000.00? By the way this is a long term loss.

[AtlantaTaxExpert]

Lake:

First, any capital loss is used to offset any capital gain. If you sold one stock for a loss of $10,000, but sold another stock for a gain of $20,000, you would pay taxes on $10,000 in gains.

If you had no capital gains, you can only claim $3,000 of your capital loss against other income (wages, business income, interest, dividends, etc.). The remaining $7,000 in losses ic arried forward to 2006. You then go through the whole process again, claiming a maximum of $3,000 in losses against other income.

This continues from year to year until you use up all of the losses, or until you die!

Don't laugh about the "until you die" part! I have several clients who took a brutal beating in the stock market in 2000, and have accumulated capital losses of around $300,000. At $3,000 a year, it would take 100 years to use it up. Not likely they will live to be 130 years old!

[lake]

Thank you very much.

[AtlantaTaxExpert]

Glad to help!