Schedule D (Form 1040), Line 21 ( regarding the amt. of capital loss deductible from other income)
In response to another inquirer’s question, you recently asserted that a married couple who co-own their investments and file a joint tax return can deduct a total of $6000 in capital losses from their other income, rather than the $3000 indicated on Schedule D, line 21. I have found no mention of this in the Schedule D instructions or on the form itself. The form indicates $3000 with the only mentioned exception being $1500 for those who are married filing separately. This implies that the $3000 limit would apply to all other categories of filers. Please clarify. Would you please cite a reference from the Internal Revenue Code or IRS tax instructions confirming that the capital loss limit of $3000 is PER PERSON for a married couple filing jointly? Thanks for your help.
Terry Says: Sorry — My original column was correct, and in responding to a reader who questioned me, (must have been working late at night), I made the error!
Below is the excerpt from that column, which had it correct as you can see from this link to the original column!
4. Deducting Losses. If your capital losses are more than your capital gains, you can deduct the difference as a loss on your tax return. This loss is limited to $3,000 per year per person, or $1,500 if you are married and file a separate return. Any excess losses can be carried forward to future years. But you cannot deduct losses on the sale of property that you hold for personal use, such as your home or car.
