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Re: Re: Carry-over capital losses

For your federal return, I'm not sure you have the rules right. When you have a capital loss carryforward, you're allowed to first use that loss to offset all your capital gains realized during the year, and then can take an additional $3,000 in losses against your wages and other income.

For Mass, the rules are similar. As long as you lived in Mass the year you had the capital loss, you can use that capital loss that you carried forward to first offset all of your capital gains realized during the year, and then to use up to $2,000 of additional losses to offset your interest and dividend income.

I agree with Allan that you should review your tax forms since you first incurred the loss, and take a close look at the Schedule B and Schedule D attached to your Mass return each year. On those Schedules, you should have reflected any loss carryforwards available for the next year.

If those forms weren't prepared correctly, you should amend them by filing a Form CA-6 with the Mass Department of Revenue. Keep in mind that you only have until 4/15/07 to amend your 2003 tax returns.

Zip Code: 01801

Re: Re: Re: Carry-over capital losses

Sorry to have stated my question unclearly.

About 5-6 years ago, I had a large capital loss while in another state and have been carrying that loss forward in my federal returns since that time. Each year I have been able to offset any small gains I might have had still take in additional $3000 off from the loss. Despite this I still have a very substantial net carry-over loss

I have now been in MA for 4 years and have not been applying the carryover capital loss to my MA returns. However, this year I have a large capital gain due to sales of certain mutual funds (earned through a broker in a different state). Is it correct that I will not be able to avoid the large capital gain liability to MA due to the fact that my previous carryover loss was from a different state? Thank you.

Re: Re: Re: Re: Carry-over capital losses

My understanding of the Mass rules is that you can only carry forward a capital loss incurred while you were a resident of Massachusetts. So if you realized the capital loss prior to moving to Mass, you might not be able to use that loss to offset this year's capital gain on your Mass return.

Did you try to find this answer on the Mass Department of Revenue's site?

Zip Code: 01801

Re: Carry-over capital losses

I cannot not seem to find any information that directly addresses this problem. However, would it not be a big penalty to moving if you cannot utilize prior carry-over capital losses for state taxes just because you moved?