Individual:
Capital loss can carryforward for 7 years to offset capital gain in the succeeding year or regualar income of up to 3000 dollars.
Corp:
Capital loss can carryforward for 7 years to offset capital gain in the succeeding year or regualar income of up to 3000 dollars. AND
Capital loss can carryback for 3 years to offset capital gain
Same year capital gain and loss offset each other.
Long term gain offset long term loss
Short term gain offset short term loss
Long term balance offset short term balance
Mark to market:
If mark to market accounting rule is selected, all gains and losses (realized or unrealized) need to be reported.
Scenarios 1:
2005 gain 100K, pay tax
2006 loss 100K, deduct 3000 from income, 97000 loss carry over to 2007
2007 no gain, no loss, deduct 3000 from income 94000 loss carry over to 2008
2008 gain 150K, (realized 91000, unrealized 59000), net loss 3000, applies to income, zero capital tax
Qing Zhuan Jia Zhi Jiao!!!
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