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If I have a capital loss in 2012 of $100,000 and then in 2013 I have a capital gain of $100,000, do I pay tax on the capital gain in 2013 or would tax be $0?
If you have a capital loss of $100,000 in 2012, and that is your total net loss, then $3,000 of that loss would be used to offset your ordinary income in 2012. So $97,000 of your loss would be carried forward to 2013. If you have no other income, then the full $100,000 loss would be carried forward. So assuming that you had some ordinary income in 2012, the carry forward of $97,000 would offset all of your 2013 gain of $100,000 except for $3,000.
If the gain in 2013 was for a sale in which the holding period was less than one year, you would pay tax on this $3,000 gain at your ordinary income rates. If the holding period was greater than a year, you would pay tax on this gain at capital gain rates.
Rob Seltzer is principal of Robert Seltzer, CPA, PFS, in Beverly Hills. You can reach him at (310) 278-9944(310) 278-9944.
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