I have accumulated a lot of capital losses carried over from many years. Do I have to deduct $3,000 of capital losses against my ordinary income or can I carry it forward to future years? Also, can I net my IRA and 401(K) distribution income against capital losses?

ANSWER

The BIDaWIZ Team's Answer:

Per IRC Section 1212(b), you can only carry forward capital losses if they exceed your capital gains. You're suppose to use up to $3,000 against ordinary income in the current year if you benefit from it. In terms of your IRA and 401(K), it's treated as ordinary income/losses as opposed to capital gains/losses. You would not be able to net them together.