Tax Loss Carry Over?

Question

I have a carry over loss of $ 10 k from 2006.

In 2007 , I have a short term cap loss of $ 10 k
In 2007 , I also have a capital gain of $ 20 K

Pls could you tell me how much will i owe - the IRS if i shut down my accounts for the rest of the year :( - I just need a good nights sleep. - For those of you thinking of day trading - Dont Do It

Thanks

Answer 1

As a daytrader, you probably only have short-term trades. All capital gains are taxed at your ordinary income rate, adding those gains to your other income.

If you are daytrading, some of your losses may not be eligible due to the "wash sale" rules. If all of your losses are "wash sale" than all of the gain is going to be taxable to you.

So the answer is that the additional income on which you are taxed is going to be anywhere from zero to $10,000 depending on how much of your loss is from wash sales.

Have a tax pro look at all your records to see if they can improve your situation, perhaps by taking a mark-to-market option if you have a lot of wash sales.

Answer 2

For 2007 you'd have a net capital gain so far of $10K - then you'd net out your carryover with that and break even and not owe capital gains taxes.

Good luck.