do i need to sell all my stocks to have tax deduct on my loss?

Question

lost few thousands in stock market, still owning some stock shares. i heard that we can have 3000 dollars tax deduct on our loss, so how to do that?

Answer 1

you have to sell stock at a loss in order to deduct it. this doesnt pertain to unrealized losses. you can deduct a maximum capital loss of $3,000 on Form 1040. report the cost basis and sales proceeds on schedule D. any excess capital loss will be carried forward to future years.

you would have had to sell the stock by 12/31/06 to deduct the capital loss on your 2006 tax return. if you sell the stock in 2007 it will have to wait til next year when you file your 2007 tax return.

Answer 2

No, you don't have to sell all your stocks. If you sold any, you have to report the sale for the year when you sold them, whether it was a gain or a loss, showing the gain or loss on that particular amount of stock. For example, if you bought 100 shares but only sold 50 shares, then your cost would be half of what you paid for the whole 100 shares.

You'll use a schedule D to report your stock sales. If your total is a loss greater than $3000, you'd just put $3000 of the loss on your 1040, and "carry over" the rest to the next year. If you sold stocks the next year at a gain, you could net in the "carryover loss". If your total was a loss of $3000 or less, you'd put the whole loss for the year on your 1040.