Members of the Maryland Association of Certified Public...

Tax answers

April 09, 1996

Members of the Maryland Association of Certified Public Accountants are answering readers' tax questions through April 15.

Q: I have been retired since 1987. Since then my only income has been Social Security and some dividends. In those years from 1987 through now I have been in the stock market and have taken a loss for each one of those years except 1995, when I had a profit. Is there any way I can use the losses that I have had since 1987 to offset that?

A: Yes, if you have had losses every year since 1987 and have been deducting these losses each year, subject to the $3,000 annual limitation, and carrying over any amounts in excess of $3,000 to the subsequent year. For 1995, you can use any of these accumulated losses to offset your gains. For example, if your net losses each year totaled $2,000, you would have deducted that amount each year and there would be no carry-over. On the other hand, if your net losses totaled $4,000 each year (1987-94), you would have deducted $3,000 each year and carried over $1,000 each year so that in 1995 you would have a loss carry-over of $8,000 to use to offset your 1995 gains.

The above advice is for general purposes only and is not intended as legal, accounting or tax advice. Specific situations may vary.

Pub Date: 4/09/96

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